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In this video tutorial, the concept of the reorder point (ROP) is explained as a method for planning inventory replenishment. The ROP is calculated based on a target level, which includes projected demand and safety stock. The target level is determined by the demand per period—either historical or calculated from MRP—combined with the review period and lead time. The video illustrates the ROP graphically, showing how inventory is consumed over time, followed by replenishment through order quantity, creating a cyclical process. This approach helps organizations manage inventory effectively by ensuring stock levels are maintained.
