What is Re Order Level in Supply Chain Management? PDF Book

Learn Re Order Level definition in supply chain management with explanation to study “What is Re Order Level”. Study re order level explanation with SCM terms to review supply chain management course for online MBA programs.

Re Order Level Definition

  • Level of inventory at which more items are ordered, usually calculated to ensure that inventory does not run out before the next batch of inventory arrives.

    Operations Management by Nigel Slack, Alistair Brandon-Jones, Robert Johnston



Re Order Level Explanation

In the executives bookkeeping, reorder level (or reorder point) is the stock level at which an organization would put in another request or begin another assembling run. Reorder level relies upon an organization's work-request lead time and its interest during that time and whether the organization keep up a security stock. Work-request lead time is the time the organization's providers take in assembling and conveying the arranged units. Recognizing the right reorder level is significant. In the event that an organization puts in another request too early, it might get the arranged units sooner than anticipated and it would need to shoulder extra conveying expenses through warehousing rent, opportunity cost, and so forth. In any case, if the organization puts in a request past the point of no return, it would bring about stock-out expenses, for instance lost deals, and so on.

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