Reorder Point, Safety Stock & Service Level
Brake pads sell 40/day. Supplier lead time is 7 days. Maria sets the reorder point so the shelf never goes empty.
- Daily usage
- Lead time in days
- Safety stock
- ERP screen
- 1
Lead time demand
40/day × 7 days = 280 units consumed while waiting.
- 2
Add safety stock
Cover 2 extra days for supplier delays: 40 × 2 = 80.
- 3
Reorder point
280 + 80 = 360 units. When count hits 360, place PO.
- 4
Validate with cycle counts
Recount weekly. If pad sales spike, recompute — ROP is not static.
Sell 30 units/day, σ_demand = 8/day, supplier lead time 7 days. Compute base ROP, then add statistical safety stock for a 95% service level (z = 1.65) and 99% (z = 2.33). The safety stock is the cost of NOT stocking out.
Tap Show next step to reveal the math one piece at a time.
Reorder point with safety stock
Given: Daily use 30, lead 7 days, safety 50
- 1
Lead-time demand
30 × 7 = 210
Slow-mover example
Given: Daily use 12, lead 14 days, safety 30
- 1
Lead-time demand
12 × 14 = 168