Order point procedure

The reorder point procedure is a method of consumption-related replenishment of material stocks. It can be used when there is regular consumption of auxiliary and operating materials as well as other relatively low-quality materials.

Order point (BP)

The order point (BP) is the amount of available inventory at which an order is placed. Therefore, the decision must first be made about the amount of the order quantity and the order point at which an order is triggered. Each time a warehouse is posted, a check is made to see whether the order point has been reached or not.

Material replenishment

A material stock replenishment is effected when the order point BP is reached. As can be seen from the figure, this is the amount that is required to cover the demand that is expected to be consumed between the initiation of the order and the provision of the additional delivery in the warehouse, without the Security distance to attack. This is also called iron stock designated.

The situation described only occurs in exceptional cases in operational practice. In most cases, it must be expected that the demand and / or the procurement time or the safety stock will change. In this case a correction of the order point is necessary.

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  • order point procedure

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