What are the Benefits of Reorder Point in Business?

[Suba]

In the business world, reorder point is one of the inventory management, we often find that novice retail businessmen often only rely on instinct or wait for stock to run out, then they reorder merchandise. However, many entrepreneurs who are considered to have sufficient experience in business, they often order goods in larger quantities, especially when approaching high seasons such as Christmas and New Year, winter, rainy season, etc. Even though their sales targets can be achieved, there is still a lot of stock left in the warehouse so that if left too long it will cause dead stock due to expiration or damaged goods.

The definition of reorder point is a point where an item in the warehouse must be replenished (reorder) before the stock of an item runs out. So in your opinion, what are the benefits of reorder point?

 

[Augusta]

Reorder points ensure that businesses replenish stock before they run out, preventing lost sales and unhappy customers due to unavailable products.