The reorder point can be different for every item of inventory, since every item may have a different usage rate, and may require differing amounts of time to receive a replenishment delivery from a supplier. The result is no interruption in production and fulfillment activities, while minimizing the total amount of inventory on hand. If the purchasing process and supplier fulfillment work as planned, the reorder point should result in the replenishment inventory arriving just as the last of the on-hand inventory is used up. It usually triggers the purchase of a predetermined amount of replenishment inventory. The reorder point tells you when to reorder inventory, so that you won’t run out of stock.
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