Reorder Point vs Reorder Quantity

Hey business owners, have you ever panicked because you ran out of stock just as a customer

was ready to buy? It's a nightmare, right? Today, I'm going to explain two essential

inventory concepts that will keep your shelves stocked and your customers happy. Reorder point

and reorder quantity. Let's break it down with a simple example. Imagine you own a cozy coffee

shop. You sell 10 bags of coffee beans every day and it takes your supplier 5 days to deliver a new

order. So, if you go through 10 bags a day for 5 days, that's 50 bags. That means your reorder

point is 50 bags. When your inventory hits 50 bags, it's time to place a new order before you

run out and disappoint your regulars. Now, let's talk about reorder quantity. Reorder quantity is

simply the amount you order each time you reach your reorder point. If you order too little,

you'll be reordering all the time. If you order too much, you'll be drowning in coffee beans and

your storage room will look and smell like a coffee warehouse. Let's say you decide to

order 100 bags every time you restock. That's your reorder quantity. Simple, right? Here's

how to remember it. Reorder point tells you when to order. Reorder quantity tells you how much to

order. Share in the comments. What's the strangest thing you've ever run out of in your business?

I once ran out of printer ink on tax day, not my finest hour. If this video helped you,

hit that like button, subscribe for more straightforward business tips, and share

it with your fellow entrepreneurs. Remember, mastering inventory is the secret to a thriving

business. And few are awkward. Sorry, we're out. See you next time on Simple Understanding.