reorder point


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Related to reorder point: Safety stock

reorder point

[re′ȯr·dər ‚pȯint]
(industrial engineering)
An arbitrary level of stock on hand plus stock due in, at or below which routine requisitions for replenishment purposes are submitted in accordance with established requisitioning schedules.
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Using known inverse cumulative distribution function of demand over lead-time given by (9), or numerical methods, it is possible to find optimal value of reorder point s, which minimizes total cost function.
It should be noted that the change of reorder point should be incorporated into the forecasting process.
Set [mathematical expression not reproducible] is the optimal solution and the optimal reorder point can be calculated from [r.sup.*] = D[L.sup.*] + [k.sup.*] [sigma] [square root of ([L.sup.*])], where [r.sup.*] denotes the optimal reorder point.
Compared to the widespread reorder point system, the pulse system has several substantial advantages.
The data was then input into an Excel model along with data on order and ship time (OST) and the service-level rate to compute safety stock and reorder points for each item (see Table 2).
The order quantity (Q) was set to 3000 and the reorder point to 300 units.
Inventory review policies in which reorder points are close to the maximum levels carried in stock (that is, a small min/max gap) will require frequent reviews.
For that reason, Supply Chain Solutions relies heavily on information technology, like its warehouse management system (WMS) to direct associates on the floor and monitor inventory levels for reorder points (Provia Software, 877-776-8421, www.provia.com).
The basic elements of SRO include a perpetual inventory system that tracks current stock levels, reorder points that tell when to place an order and a sales forecasting system that calculates how much product the store will sell between the time the order is placed and the receipt of the next order.
In the modified MRP system proposed here, an order release of a kanban part is to be entered in its MRP file whenever the gross requirement accumulates to a container size in a multi-bin kanban system or the projected available quantity reaches the reorder point in a one-bin kanban system.
Readers will also gain a better understanding of how to set a reorder point, how to decide on the economic order quantity, and what steps they can take to achieve more balanced inventory.