GIFSQ Tools · Module 18 — Manufacturing, Costing & Supply Chain · Tool 350 of 500
Know when to order: the reorder point is the stock level that triggers a new order — the demand during the supplier lead time, plus the safety stock. Enter your daily usage, lead time, safety stock and stock on hand.
Try sample values — fills the form with the worked example below.
–
Demand during lead time
–
Reorder point
–
Days of cover on hand
Equation: Demand during lead time = average daily demand × lead time (days). Reorder point = demand during lead time + safety stock. Days of cover = stock on hand ÷ average daily demand.
Method: Reorder-point inventory control: order when the stock falls to the reorder point, so the new delivery arrives just as the stock runs out. The safety stock covers demand that runs above average or a delivery that runs late.
Assumptions: daily demand is steady at its average; the lead time is fixed; the safety stock figure comes from Tool 351 or your own service-level choice.
Limitations: real demand and lead times vary — that is what the safety stock is for, and it must be sized to the variation, not guessed; the tool does not set the order quantity (see Tool 353).
Rounding: reorder point and lead-time demand as whole units; days of cover to 1 decimal place; intermediates unrounded.
This is a calculation aid, not a laboratory report — confirm against your accredited method before citing a value.
Method: Reorder-point inventory control: order when the stock falls to the reorder point, so the new delivery arrives just as the stock runs out. The safety stock covers demand that runs above average or a delivery that runs late.
Assumptions: daily demand is steady at its average; the lead time is fixed; the safety stock figure comes from Tool 351 or your own service-level choice.
Limitations: real demand and lead times vary — that is what the safety stock is for, and it must be sized to the variation, not guessed; the tool does not set the order quantity (see Tool 353).
Rounding: reorder point and lead-time demand as whole units; days of cover to 1 decimal place; intermediates unrounded.
This is a calculation aid, not a laboratory report — confirm against your accredited method before citing a value.
Worked example: Daily demand 50 units, lead time 7 days, safety stock 100 units, 500 on hand: demand during lead time = 350; reorder point = 450; cover = 10.0 days — order when stock falls to 450 units.
Enter values above to see results.
Check the stock daily against the reorder point — a weekly check on a fast-moving item orders too late. Tool 350 of 500 — GIFSQ
