Glossary
What is a reorder level?
The reorder level in plain words, the simple formula behind it, and how it turns into a daily buying list.
Updated
In short
A reorder level is the quantity at which a product should be bought or made again. In SimpleERP each product can carry a reorder level, and products at or below it appear on the low-stock list.
A reorder level is the stock quantity at which a product should be bought or made again, set so that new stock arrives before the shelf runs empty. It is usually daily sales multiplied by the supplier's delivery time, plus a safety stock for slow deliveries or busy weeks. Products at or below their reorder level form the day's buying list.
Reorder level: a worked example
Lakshmi Steel sells about 6 Cable tray 3 m a day. Tamil Nadu Steels takes 7 days to deliver, and the owner keeps 18 trays as safety stock for late lorries.
| Step | Working | Result |
|---|---|---|
| Sales during delivery time | 6 a day × 7 days | 42 trays |
| Safety stock | Owner's choice | 18 trays |
| Reorder level | 42 + 18 | 60 trays |
| On hand today | Main godown | 48 trays |
| Shortfall | 60 − 48 | 12 trays |
FAQ
Questions, answered
What is the formula for reorder level?
Reorder level = average daily sales × delivery time in days + safety stock. If you sell 6 a day, the supplier takes 7 days and you want 18 spare, the level is 60. Use real sales from the last few months, not a guess.
Is reorder level the same as minimum stock?
Not quite. Minimum stock is the floor you never want to go below, often the same as safety stock. The reorder level sits above it, at the point where you must order so that stock arrives before you reach that floor.
Does SimpleERP order stock automatically?
SimpleERP does not order stock automatically. Products at or below their level appear on the low-stock list and in the dashboard's needs-attention list, with the shortfall and last supplier. You raise the purchase order yourself from that list, choosing the quantity, and send it to the supplier.
How often should I change reorder levels?
Review them each season or when sales change sharply. A level set for the slow monsoon months will run you out of stock in the festival season. Export the stock list to CSV and compare levels with recent sales in one sitting.
Related
Keep reading
Reorder quantity
How many units to buy each time a product reaches its reorder level, balancing ordering cost against holding cost.
Read moreDead stock
Goods with no sales for months that are unlikely to sell at full price, tying up cash and godown space.
Read moreInventory
Stock on hand by warehouse at weighted average cost, with a movement ledger and a low-stock list.
Read more
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