The inventory level at which a new order should be placed to replenish stock before it runs out is known as the Order Point, or Reorder Point. It is an essential component of inventory optimization, guaranteeing that goods are available when needed without keeping extra inventory on hand. Usually, lead time demand and safety stock levels are used to determine order points. Businesses can maintain service levels and maximize inventory investment by establishing precise reorder points that strike a balance between the expense of inventory holding and the possibility of stockouts.
