Formula for Calculating the Reorder Level

The reorder level is defined as the sum of the safety stock plus the requirement forecast within the replenishment lead time (see formula (17)).

A forecast was carried out on a monthly basis. A month has 30 days in the case of external procurement.

Safety stock

 

100

Forecast

1st subsequent period

200

 

2nd subsequent periode

00

 

3rd subsequent period

400

Replenishment lead time

40 days

0/30

   

30/30 + 10/30

 

(an entire monthly requirement + a part of the the following month)

Reorder level = 100 + 30/30 * 200 + 10/30 * 300 = 400