A reorder point is the inventory threshold that triggers replenishment under a defined stock-control method.
How it works in retail
A common approach combines expected demand during lead time with safety stock. The calculation should use consistent units and an appropriate inventory-position measure.
A retail example
Expected demand during lead time is 40 units and the buffer is 15 units. Under this simple model, the reorder point is 55 units.
What to keep in mind
On-order quantities, committed stock and variable lead times can change the decision. A threshold based only on shelf stock may trigger unnecessary orders.
Examples are illustrative. Terminology and measurement conventions can vary by business and market.