Order Point

An order point (reorder point, ROP) is the inventory level that triggers replenishment. When available stock falls to or below this threshold, a new order is placed. It is calculated as forecasted demand during lead time plus safety stock, ensuring material arrives before a stockout. In manufacturing, it is also called the reorder level.

On a manufacturing shop floor, the order point governs when raw materials, components, or MRO items are released for replenishment. A planner compares available inventory—on-hand plus open purchase orders minus allocations—against the threshold. If the quantity is at or below the order point, a purchase order or internal production request is triggered so the next lot arrives before the last usable unit is consumed. This becomes critical when supplier lead times are variable, because the threshold must cover expected usage across the full replenishment window plus a safety buffer. In warehouses, the same logic automatically replenishes pick faces from reserve storage or triggers supplier purchase orders, maintaining service levels without overbuying. In ERP/MRP systems, the order point acts as a control signal: procurement launches when available quantity drops to the threshold, preventing line stoppages and excess inventory.