How do you find the re order level
To find the reorder level, you need to have the following information:
1. Lead Time: The time it takes for a new order to be delivered after placing it.
2. Average Daily Demand: The average number of units consumed per day.
The formula to calculate the reorder level is:
Reorder Level = Lead Time * Average Daily Demand
For example, if the lead time is 5 days and the average daily demand is 20 units, the reorder level would be:
Reorder Level = 5 days * 20 units = 100 units
So, when the stock level reaches 100 units, it's time to reorder to ensure you have enough inventory to meet demand during the lead time.