What is the term for the minimum stock level at which an order is placed?

The term for the minimum stock level at which an order is placed is referred to as the Reorder Point. This concept is crucial in inventory management because it indicates the precise moment when inventory reaches a level that requires replenishment. Understanding the Reorder Point helps businesses maintain optimal stock levels, preventing disruptions in operations caused by stockouts or excessive inventory.

Setting a Reorder Point involves analyzing the lead time for receiving new stock and the average usage rate of the inventory. When the stock level drops to this predetermined point, it triggers the process to replenish stock, ensuring that the business can continue to meet customer demand without delay. This systematic approach is essential for efficient inventory control and helps in managing resources strategically to enhance operational efficiency.