MANAGEMENT

Detailed explanation-1: -A reorder point (ROP) is a specific level at which your stock needs to be replenished. In other words, it tells you when to place an order so you won’t run out of stock.

Detailed explanation-2: -Reorder Level represents that level of inventory which when reached the order for refilling inventory must be placed with the supplier so that the required material is delivered before the entire stock of material comes to an end.

Detailed explanation-3: -Reorder quantity is the number of products you order from a supplier, where the reorder point is the predetermined number of units you have left on hand at which you need to reorder more inventory from your supplier or you will run out.

Detailed explanation-4: -Calculating Reorder Level – Reorder Level Formula To calculate your reorder level, multiply your average daily usage rate by the lead time in days for an inventory item. Suppose, Mamaearth experiences an average daily usage of its Vitamin C Hand Cream of 10000 units, and the lead time for producing new units is 5 days.

Detailed explanation-5: -Reorder level of stock = Minimum stock + Average consumption during normal delivery time.