CCalclabhub

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.

SymbolMeaning
ROPReorder point
dAverage daily demand
LLead time
SSSafety stock

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.