The reorder level is the minimum stock level that triggers a purchase order for more supply. This ensures that there is enough inventory on hand to meet customer demand.
Reordering inventory can be done manually or automatically. When done manually, a manager or buyer reviews inventory levels and decides when to place a purchase order. With automatic reordering, systems are in place to track inventory levels and generate purchase orders when needed.
An effective reorder system is critical to maintaining adequate inventory levels and avoiding stockouts. Stockouts can lead to lost sales, frustrated customers, and disruptions in the supply chain.
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