Reorder Point

The reorder point answers "when", where EOQ answers "how much". If you use 120 units a day and the supplier takes ten days from purchase order to receiving dock, you will consume 1,200 units while waiting. Trigger the order when the shelf hits 1,200 and the last unit walks out the door as the truck backs in.

Two errors turn up constantly. The first is mixing periods: a weekly usage rate against a lead time in days will be off by a factor of seven, and the answer looks plausible enough to survive a meeting. The second is using the supplier's promised lead time rather than the one you have actually measured. Quoted lead time is a sales figure. Pull the last twenty receipts, take the real average, and use that.

Note what this version deliberately leaves out. Pure $R = dL$ assumes demand and lead time are both known exactly, which they never are, so a reorder point built this way stocks out roughly half the time by construction. Add safety stock on top before you rely on it.