The reorder level is the point at which you buy again. Set it too low and the item runs out before the new lot arrives; set it too high and money sits on the shelf.
A simple way to set it
Reorder level = average daily use × supplier lead time in days + safety stockA hardware store sells about 12 half-inch ball valves a day. The supplier delivers in 5 days. The owner keeps 3 days of safety stock.
Reorder level = 12 × 5 + 12 × 3 = 96 piecesWhen stock on hand falls to 96, the order goes out.
Things that change it
- Season
- pump makers in Rajkot and Coimbatore build stock months before summer, so their reorder levels for copper wire rise in winter.
- Lead time
- imported or outstation material needs a higher level.
- Minimum order quantity
- a supplier that ships only full bundles changes how much you order, though not when.
Review
Reorder levels should be checked every few months against actual sales. Items that never reach their level are candidates for dead stock; items that often run out need a higher one.
The MatruOS Home screen shows low stock, so items running short are seen the same day.