Re-order point = (average demand × lead time) + safety stock. When current stock drops to this level, trigger a purchase order.
Formula
$$ ROP = \bar D \cdot L + SS $$
Symbol legend
| Symbol | Meaning | Unit | Source |
|---|---|---|---|
| $\bar D$ | Mean demand per period | units | history |
| $L$ | Lead time | periods | procurement |
| $SS$ | Safety stock | units | safety-stock calc |
Sources
- Silver-Meal & Peterson - Inventory Management.