Supply Chain

Reorder PointROP

The inventory level at which a replenishment order should be placed to avoid a stockout during the lead time.

The reorder point (ROP) is the inventory level that triggers a new order. It equals expected demand during the replenishment lead time plus safety stock to cover variability.

Set it too low and you risk stockouts; too high and you carry excess inventory. ROP works with the EOQ to define a complete reorder policy and is the math behind two-bin kanban systems.

Go Deeper
Safety Stock Calculator→Inventory Management guide→
Related Terms
Safety Stock
Extra inventory held as a buffer against demand and supply variability to protect service level.
Economic Order Quantity
The order quantity that minimizes the combined cost of ordering and holding inventory.
Inventory
Raw materials, work-in-process, and finished goods held in the system — one of the eight wastes when excessive.
Lead Time
The total elapsed time from order (or raw material) to delivery (or finished product), including all waiting.
ABC Analysis
An inventory categorization that ranks items into A, B, and C classes by value so control effort is focused where it matters.

Put Reorder Point into practice

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