Glossary
What is reorder quantity?
How many to order once a product hits its reorder level, from the simple rule to the economic order quantity.
Updated
In short
Reorder quantity is how many units you order each time a product reaches its reorder level. SimpleERP shows the shortfall on the low-stock list, and you choose the quantity on the purchase order you raise.
Reorder quantity is the number of units you buy or make each time a product reaches its reorder level. Order too few and you place orders every week; order too many and cash sits on the shelf. It is set by sales rate, supplier pack sizes and minimum orders, or worked out with the economic order quantity formula that balances ordering cost against holding cost.
Reorder quantity: a worked example
Cable tray 3 m at Lakshmi Steel: about 1,800 sold a year, ₹500 to place and receive one order, and holding cost of 20% of the ₹1,020 average cost, which is ₹204 per tray per year.
| Way to choose | Working | Order quantity |
|---|---|---|
| Shortfall only | Reorder level 60 − 48 on hand | 12 trays |
| Supplier bundle size | Bundles of 25, rounded up from 12 | 25 trays |
| Economic order quantity | √(2 × 1,800 × ₹500 ÷ ₹204) | about 94 trays |
FAQ
Questions, answered
What is the difference between reorder level and reorder quantity?
Reorder level is when to order: the stock figure that triggers a purchase. Reorder quantity is how much to order once you reach it. A cable tray might have a level of 60 and an order quantity of 100.
What is EOQ in simple words?
Economic order quantity is the order size where the cost of placing orders and the cost of holding stock are smallest together. The formula is the square root of 2 × yearly demand × cost per order ÷ holding cost per unit per year.
Should I always order the EOQ?
Use it as a guide. Supplier pack sizes, minimum order values, freight slabs, price rises and storage space all matter more for a small business. Round the EOQ to the nearest bundle that suits your godown and cash.
Can SimpleERP remember a fixed order quantity per product?
SimpleERP has no order quantity field today and does not suggest one. The low-stock list shows the shortfall against the reorder level and the last supplier; you raise the purchase order and type the quantity. Note each product's usual order quantity in its description if you want it at hand.
Related
Keep reading
Reorder level
The stock quantity at which a product should be bought or made again, set so new stock arrives before the shelf runs empty.
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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