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Logistics & Supply Chain vocabulary · Inventory Management

Reorder point

Meaning in logistics & supply chain, with examples

nounCommon term

In logistics & supply chain, reorder point means: The stock level at which a new order should be placed, calculated so that the new goods arrive before the existing stock runs out.

In Turkish: yeniden sipariş noktası, sipariş verme noktası

How it is used

A basic formula is average demand during the lead time plus safety stock. Planners set reorder points in the ERP system, which suggests a purchase when stock falls below them. Often shortened to ROP.

Example sentences

  1. When the stock of filters reaches the reorder point of 400, the system creates a purchase requisition.

  2. We raised the reorder point because the supplier's lead time doubled.

Common collocations

  • set the reorder point
  • reach the reorder point
  • reorder point formula
  • reorder level
  • safety stockExtra stock kept on top of expected demand to protect against sudden increases in demand or late deliveries from suppliers.
  • lead timeThe time between placing an order or starting a process and receiving the finished result, for example from sending a purchase order to the goods arriving.
  • replenishTo fill up stock again after it has been used or sold, by ordering from suppliers or moving goods from another location.
  • stockoutA situation in which an item is completely out of stock, so orders cannot be filled or production stops until new goods arrive.
  • MRPShort for material requirements planning: a system that uses the production plan, bills of materials and stock levels to calculate which materials to order or make, and when.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Inventory Management

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