Reorder Point – How to Calculate


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A video to explain how to calculate the Reorder Point in an easy way. Here the link: http://www.leanlab.name/reorder-point-software-excel

The Model:

1) There is a departement (or more than one) that use a material for production a certain rate
2) The material flow is from the warehouse to the department
3) There is a Buyer/Planner entitled to refill the warehouse by buying from a supplier
4) The goal is to have the stock at a level that avoid stock-out and mantain a resonable inventory level

The Ideal World:

A) The users take frow warehouse at costant rate (i.e. 1 kg / day, 10 lt / week, 1 Pack / h)
B) When the stock is “zero” the supplier insantly refill the stock when the planner give him the information
C) The diagram the show how the real world works is reported in Fig. 1

The Real World:

I) In the real world the user do not consume at constant rate
II) The supplier cannot refill the stock instantly and the planner cannot give the input immediately
III) A certain amount of stock has always be present in the company to avoid stock-out and prodction stopping

How to calculate the right amount of stock?

Discover using our Reorder Point Software:
http://www.leanlab.name/reorder-point-software-excel

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