Operations
Reorder point
The first term covers demand during the lead time; the second covers the variability around it.
The Formula
ROP = daily usage x lead time + safety stock
The first term covers demand during the lead time; the second covers the variability around it.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| ROP | Reorder point | units | Stock level that triggers the next purchase order. |
| d | Daily usage | units/day | Average units consumed per day. |
| L | Lead time | days | Days from placing an order to receiving it. |
| SS | Safety stock | units | Buffer held against faster demand or late delivery. |
What Each Symbol Means
ROPunits
Reorder point
Stock level that triggers the next purchase order.
dunits/day
Daily usage
Average units consumed per day.
Ldays
Lead time
Days from placing an order to receiving it.
SSunits
Safety stock
Buffer held against faster demand or late delivery.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate a reorder point 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 A Reorder Point, filed under Business. Every number the guide produces comes from substituting into this one line.