Order Up To Level

Order-Up-To Level (OUTL) is the target inventory position a planner resets to at each periodic review in a periodic review inventory system; the order quantity is the difference between that target S and the current inventory position (on-hand + on-order - backorders). In practice, it is the maximum stock position desired after replenishment, so each review cycle tops up to S rather than using continuous reorder-point triggers.

A planner reviews each SKU on a fixed cadence, daily or weekly, and calculates inventory position from on-hand stock, open purchase orders, work orders, and backorders. The system orders S minus inventory position, topping up to the target. This suits raw materials with repeat consumption, finished goods with fixed service targets, and MRO spares where demand varies but replenishment is regular. OUTL keeps line-side inventory high enough to absorb demand and lead-time variation without uncontrolled excess. The target comes from expected demand over review period plus lead time, with safety stock protecting service. In ERP, it appears as min-max or periodic review, where receiving and putaway update inventory position and the next cycle computes the top-up before stockouts propagate. A key control point is pipeline inventory: on-order units count toward inventory position even though not physically available, so late receipts can make visible stock look adequate while production faces shortages.