Example
Luchinski uses 10 forms per day and it takes five days to place and receive an order of forms, thus:
Reorder point = 10 x 5 = 50 units and Luchinski should reorder when his stock of forms reaches 50
Safety Stocks are extra inventories that can be drawn down when actual lead times and/or usage rates are greater than expected
- 1994, HarperCollins Publishers