Inventory systems need a clear trigger for action. A reorder point is the stock level at which a new replenishment order should be placed to avoid running out before the next delivery arrives.

Calculation typically multiplies expected demand during lead time by lead time length and then adds safety stock. When on-hand plus on-order inventory falls to the reorder point, the system or planner releases an order. Dynamic reorder points adjust as demand or lead time changes.

Setting the point too high inflates inventory; setting it too low risks stockouts. Accurate demand and lead-time data are prerequisites. Reorder points remain a practical backbone of continuous-review inventory policies.

• Inventory level that triggers replenishment
• Based on lead-time demand plus safety stock
• Used in continuous-review systems
• Must be updated as demand and lead times change