ROP (Reorder Point)
is the inventory level at which a business should order more stock. It helps prevent items from running out while a new order is being delivered.
A common formula is: ROP = demand during supplier lead time + safety stock. For example, if a company expects to use 100 units while waiting for delivery and keeps 25 units as safety stock, its reorder point is 125 units. When available inventory reaches that level, the company should consider replenishment.
