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Reordering Point System

The way that "the inventory becomes less than the control limit then we reorder." is the limit called "reordering point". This system is one of the Inventory Control .

Calculation of Reordering Point

Reordering point is calculated to cover the amount of ship from reordring day to arrival day (= lead time).

This amount is put the maximum amount in the unevennes to avoid the short.

There are some theories to calculate the reordering point.
"The maximum amount in the lead time" is common idea among them.

Theory Using Normal Distrbution

The most famous theory is using normal distribution .

This theory estimates the amouny by average and standard deviation .

This theory put that "Shipping occurs every day. And the distribution of the amount of ship each day is similar to normal distribution." In may experience, this condision is not similar to the reality.

If the real distribution of the amoun is far different from normal distribution, the estimated maximum amount becomses too large or too small.

Theory Not Using Normal Distribution

There is a theory that not use the condition of using normal distribution.

In this theory, for example, if the maximum amount in the lead time is 100, this thory put the reordering point as 100.

To Avoid Short

Theories in this page and Kanban System are useful under the condition that there are not irregular ship.

Theory not using normal distribution is easier to expect the short because it is not use the thoery of probability.

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