MANAGEMENT

Detailed explanation-1: -Reorder Quantity = ADU x ALT. Once you multiply ADU and ALT, you’ll know the amount of inventory you need to reorder. Let’s look at an example of how to calculate reorder quantity for an individual product: ADU = 10 units.

Detailed explanation-2: -Reorder quantity, also known as the reorder point, is the quantity of an order to be placed for purchasing a specific item that needs to be restocked. It is based on the supplier’s average replenishment period, the item’s maximum usage during the replenishment interval and the need for safety stock.

Detailed explanation-3: -The average time taken by the supplier to deliver the order to the factory’s stores is the average reorder period.

Detailed explanation-4: -How do you calculate reorder point with example? A simple reorder point calculation is daily unit sales multiplied by lead time between inventory order and its arrival in days, plus safety stock.

Detailed explanation-5: -To calculate the reorder level, multiply the average daily usage rate by the lead time in days for an inventory item.