In a nutshell: The reorder point

A simple disposition procedure is the reorder point procedure. It works with a reorder point, often referred to as a reorder point, which automatically triggers procurement when the stock level falls below.

Procurement is therefore consumption-oriented (pull principle) and not deterministic (push principle). The reorder point must be dimensioned in such a way that it covers the requirements until the end of the replacement period. It therefore results from the sum of the safety stock and the basic requirement within the replacement period. Short replenishment times therefore lead to low reorder levels, while long replenishment times lead to high reorder levels. The reorder point procedure is therefore more suitable for materials with short replenishment times.

Our tip:

As the demand behavior of a material can change, the reorder point must be checked and adjusted regularly. As a rule, reorder points are set too high, as the reorder point is increased manually if a material shortage occurs. It then often remains at a high level, as excessively high inventories are not discovered in day-to-day operations, but only through corresponding analyses in inventory controlling. In your ERP system, set the reorder point procedure to dynamic reorder point calculation in order to keep the reorder point at an appropriate level at all times. If your ERP system does not have this function, regularly determine the correct reorder points outside the system. If you have any questions, just give us a call.

Prof. Dr. Andreas Kemmner

Prof. Dr. Andreas Kemmner

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