Glossary
What is Reorder Point?
Last updated July 2026
Definition
The reorder point is the inventory level that triggers a replenishment order. When it's stale, you either stock out or over-buy.
Also known as: ROP
Formula
Reorder Point = (Average Daily Demand × Lead Time) + Safety Stock A reorder point should equal expected demand over the lead time plus safety stock. In practice, many are set once and left for years while demand shifts underneath them.
Continuously right-sizing reorder points is how you stop excess from rebuilding after you've cleared it.
Part of Excess & obsolete inventory.
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