Lesson: Reorder Point

In this lesson, join Nick Palazzolo, CPA, as he delves into the procedures and strategies surrounding efficient inventory management through the concept of reorder point. With a focus on minimizing carrying costs, Nick outlines how to determine the ideal time to restock inventory, bridging the gap between the just-in-time inventory approach and the necessity of safety stock. He breaks down the reorder point formula, explaining the significance of maintaining a buffer of safety stock to handle unexpected orders, and methodically walks through how sales during lead time can influence the reorder point calculation. Using a practical example, Nick demonstrates how to apply this formula, ensuring comprehension of not just the 'how' but also the 'why' behind keeping just the right amount of inventory on hand. By the end of this lesson, the straightforward approach Nick employs will empower confident decision-making for maintaining optimal inventory levels.