The basic formula to calculate the reorder point is: Reorder Point = (Average Daily Usage Rate x Lead Time) + Safety Stock Let's break this down:
Average Daily Usage Rate: This is the average number of units sold per day. Lead Time: The time it takes for a new order to be delivered after it is placed. Safety Stock: An additional quantity of inventory kept to mitigate the risk of stockouts due to demand fluctuations or supply chain disruptions.