A reorder point is the inventory level that triggers a new order.

A reorder point is the inventory level that triggers a new order.

• A. True
• B. False
• C. It depends on lead time
• D. Not enough information

Answer: (A)

The reorder point represents the inventory level at which you place a replenishment order to avoid stockouts during the lead time. It’s set to cover expected demand during that lead time, and often includes safety stock to guard against variability. For example, if you expect to use 60 units during the 5-day lead time and keep 15 units as safety stock, your reorder point is 75 units; when on-hand inventory hits 75, you trigger a new order. This shows why the statement is true: the reorder point is inherently the level that signals when to reorder. In practice, lead time and variability affect the exact number, but the concept of a trigger level remains.