Operations
Reorder point
The stock level that triggers an order, being average demand over the lead time plus the buffer.
The Formula
ROP = average daily demand x L + SS
The stock level that triggers an order, being average demand over the lead time plus the buffer.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| ROP | Reorder point | number | Units at which an order is placed. |
| d | Average daily demand | number | Units sold per day on average. |
| L | Lead time | number | Days from placing an order to receipt. |
| SS | Safety stock | number | Buffer held in units. |
What Each Symbol Means
ROPnumber
Reorder point
Units at which an order is placed.
dnumber
Average daily demand
Units sold per day on average.
Lnumber
Lead time
Days from placing an order to receipt.
SSnumber
Safety stock
Buffer held in units.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate safety stock page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Safety Stock, filed under Business. Every number the guide produces comes from substituting into this one line.