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How to calculate Reorder point

The Reorder point formula, with plain worked examples you can check yourself.

Reorder point = d × L + SS

Worked examples

d = 40 · L = 7 · SS = 50Reorder point = 330
d = 10 · L = 3 · SS = 100Reorder point = 130
d = 10 · L = 10 · SS = 20Reorder point = 120

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Operations.

Related terms

BottleneckOutsourcingEconomies of scaleLean manufacturingCapacity planningStandard operating procedure

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