Reorder Point (ROP)
Quick answer
The stock level at which a new order must be placed to avoid a stockout before goods arrive.
Key takeaways
- Average demand and its variability
- Real supplier lead time
- Target service level (fill rate)
What the reorder point is
Reorder point (ROP) is the stock threshold at which a replenishment order is triggered. Classic formula: ROP = (average daily demand × lead time in days) + safety stock.
Why it matters
A well-calibrated ROP maintains availability without overstocking. Set too low → stockouts and lost sales; too high → locked capital and dead stock.
What drives ROP
- Average demand and its variability
- Real supplier lead time
- Target service level (fill rate)
How CRMconnect helps
CRMconnect computes ROP dynamically per SKU using real demand and measured lead time, and can automatically trigger orders or order proposals when stock hits the threshold.
Real-world example
For a SKU with 40 units/day demand and 10-day lead time, with 120-unit safety stock, ROP = 520 units. CRMconnect auto-generates the order proposal when stock drops below 520.
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Frequently asked
Is ROP fixed or does it change?+
It should be recalculated periodically. Demand and lead time vary seasonally, so a fixed ROP quickly becomes wrong. CRMconnect recalculates it dynamically.
Difference between ROP and safety stock?+
Safety stock is the buffer for variability; ROP is the total threshold (lead-time consumption + safety stock) at which you order.
Where CRMconnect fits
Related terms
Lead time
The total time between placing a replenishment order and the goods becoming actually available for sale.
LogisticsSafety stock
Extra buffer inventory held to prevent stockouts caused by demand or supply variability.
OperationsEconomic Order Quantity (EOQ)
The optimal order quantity that minimises the combined total of ordering and holding costs.
LogisticsReplenishment
Automatically refilling picking locations from reserve stock to prevent stockouts during picking.