Level signifies the quantity of a Stock Item in hand, after reaching which you
must place orders for your supplies. The importance of Reorder Level arises
from the need to have sufficient stocks to service customer orders and, at the
same time, not to unnecessarily accumulate stock.
the points to be considered while deciding the reorder levels are as follows.
The lead-time for
suppliers to deliver the stock.
The delivery time
specified by the customer.
The stock-in-hand to
satisfy orders in the meantime.