What is a reorder level
Reorder level and reorder point are often used interchangeably. Reorder level is the level of inventory at which a business should order more of a particular item in order to maintain the desired level of inventory, also called as the trigger point for ordering more inventory. The reorder level is determined by considering factors such as the rate at which the item is sold, the lead time for restocking, and the safety stock (buffer inventory) the company wants to keep on hand. The goal of reorder level is to prevent stockouts, or running out of an item, while also avoiding overstocking, which leads to unnecessary carrying costs.