Quick Summary: Ordering levels define when the app recommends an order and how much it suggests. These levels help you understand whether an item truly needs replenishment and explain why the system generates specific order quantities.
The Saw Tooth Diagram: Ideal Inventory Flow
To understand ordering behavior, it helps to visualize how inventory naturally moves. In an ideal world, your stock levels form a repeating saw tooth pattern.
Safety Stock (SS): This is the base of the pattern. It is your protection buffer, the minimum level you do not plan to consume. It exists to protect against unexpected demand or supplier delays.
Replenishment Cycle (RC): This is the typical amount of stock you buy at one time, often expressed as days of demand.
Maximum Level (SS + RC): This is the highest your stock should ideally reach.
In this ideal scenario, you would consume stock until you hit your Safety Stock level, at which moment a new order arrives to boost you back to the Maximum.
However, real replenishment is not instantaneous, which introduces the need for ordering levels.
Ordering Levels: Timing Is Essential
In reality, orders are not instantaneous. We cannot wait until we hit Safety Stock to place an order, because the supplier needs time to deliver. We must factor in Lead Time (LT).
To manage this, the app uses two ordering levels:
Reorder Point (SS + LT) — When to order
Order Up To Level (SS + LT + RC) — How much to order
These two values work together to time replenishment correctly and size orders appropriately.
Reorder Point (SS + LT): When to Order
The Reorder Point acts as the "trigger." It tells the system when it is time to place an order.
Formula: Safety Stock (SS) + Lead Time (LT)
Logic: We must order when we have enough stock left to last us exactly through the Lead Time, plus our Safety Stock buffer.
How the App Uses This: The system monitors your Net Stock (Stock on Hand + On Order - Allocated).
IF Net Stock > Reorder Point: You have enough stock. No order is recommended.
IF Net Stock ≤ Reorder Point: The trigger is pulled. An order is recommended.
Order Up To Level (SS + LT + RC): How Much to Order
Once the trigger is pulled, the system needs to calculate the quantity. We do not just order up to the Maximum Level; we order up to the Order Up To Level.
Formula: Safety Stock (SS) + Lead Time (LT) + Replenishment Cycle (RC)
Logic: When we place an order today, it won't arrive for some time (Lead Time). The order we place today must cover the period after it arrives. Therefore, we target a level that accounts for the Lead Time consumption plus the full replenishment cycle and safety stock.
This ensures that:
When the delivery arrives, stock increases back to a healthy target (Max level)
Stock can then decline gradually through the RC period
The next reorder moment will again occur at the Reorder Point
This creates a predictable replenishment rhythm that aligns with both demand and supplier timing.
Summary of the Levels
Level Type | Description | Formula |
Minimum Level | The floor. We never plan to go below this. | SS |
Maximum Level | The ideal ceiling for stock on hand. | SS + RC |
Reorder Point | The trigger line. When Net Stock hits this, we order. | SS + LT |
Order Up To Level | The target line. We order enough to reach this theoretical height. | SS + LT + RC |
Example
Suppose an item has:
Lead Time (LT) = 20 days
Safety Stock (SS) = 10 days
Replenishment Cycle (RC) = 30 days
Then:
Min Level = 10 days of stock (SS)
Max level = 40 days of stock (SS + RC)
Reorder Point = 30 days of stock (SS + LT)
Order Up To Level = 60 days of stock (SS + LT + RC)
When Net Stock falls to 30 days, the app recommends an order large enough to raise it to 60 days, resulting in 40 days of stock once the order arrives.
How Ordering Levels Convert From Days to Units
Ordering levels are expressed in days, but orders are placed in units.
To convert days into units, the app uses the forecast for the relevant cover forward period:
The lead time portion uses expected demand from today
The safety stock portion uses demand beginning after lead time
The replenishment cycle uses demand beginning after safety stock
➜ For more on this topic, read: Cover Forward Period Explained
⚠️ Watchouts
Lead time accuracy: Incorrect lead time values distort both the Reorder Point and the Order Up To Level.
Reorder Point meaning: The Reorder Point is not a simple minimum. It includes safety stock plus lead time demand.
Review period impact: Long review periods can cause stock to drift below intended protection levels before orders are actioned. See Order Frequency (Review Period) Explained
💡 Tips
Check ordering inputs: When an order quantity looks unusual, start with SS, LT, and RC. These often explain the behavior. See The Recommended Order Quantity (ROQ) Calculation Explained
Cross check with Projection: Comparing ordering levels with the Projection tab helps confirm that replenishment patterns behave as expected.
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