Re order Level Example

Re order Level Example

Re order level is a level of placing new order. This concept can be explained with simple example. Re order level help is effective supervision tool of inventory level.

Re order Level = Maximum usage x Maximum Lead Time

Example

Number of Unit required per week for production= 10,000

Maximum time required to reach the stock at god won= 7 weeks

What would be Re order level?

Solution

Re order Level = Maximum usage x Maximum Lead Time

= 10000 x 7

=70,000 units

When stock reaches at level of 70,000, new order is to be placed.