1. What is Reorder Level?

The reorder level is the inventory level at which a new order should be placed to replenish stock before it runs out. It's calculated based on average daily demand and lead time.

2. How Does the Calculator Work?

The calculator uses the reorder level formula:

Where:

• Average Daily Demand — Expected daily consumption of inventory items
• Lead Time — Time between placing an order and receiving it

Explanation: The formula ensures you have enough inventory to cover demand during the lead time period.

3. Importance of Reorder Level

Details: Proper reorder level calculation prevents stockouts (which can disrupt operations) while avoiding excessive inventory (which ties up capital).

4. Using the Calculator

Tips: Enter average daily demand in units/day and lead time in days. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Should I include safety stock in reorder level?
A: This calculator gives the basic reorder level. For safety stock, add your desired buffer to the calculated reorder level.

Q2: How often should I recalculate reorder level?
A: Whenever demand patterns or lead times change significantly, typically quarterly or when you notice changes.

Q3: What if my demand is seasonal?
A: For seasonal items, calculate separate reorder levels for different seasons based on their specific demand patterns.

Q4: How does this differ from Economic Order Quantity (EOQ)?
A: Reorder level tells WHEN to order, while EOQ tells HOW MUCH to order to minimize total inventory costs.

Q5: What if my lead time varies?
A: Use the maximum expected lead time or calculate a weighted average lead time for more accuracy.