SKULabs makes reordering easy by auto-populating the "Quantity" field when creating purchase orders. Since different businesses implement varying reordering strategies, SKULabs offers a reorder rule that is customizable to suit your reordering strategy using these variables:
on_hand, reserved, free, incoming, alert, sold.
Reorder point: equals the multiple of maximum units sold per day and maximum lead time (factoring in emergency delays).
Safety stock: equals to stock that would be needed in case of delayed PO delivery. It is roughly the multiple of maximum daily sales and maximum delay time.
Backordered stock: equals to the amount of stock customers have ordered but have not yet received because it's currently out-of-stock
Target a reorder point
Set items' stock alert levels to equal to re-order points and use reorder rule as follows:
Math.max(alert - (free + incoming), 0).
Target a reorder point with safety stock
It's best practice to reserve safety stock just in case of unexpected sales spike or a delay in PO delivery time, particularly when implementing a lean or just-in-time inventory management strategy.
Set items' stock alert levels to equal to re-order points. Then, determine a safety stock factor, and one way to determine a safety-stock factor is as a percentage of available stock (free + incoming). For instance, if you use a safety stock factor of 15%, the reorder rule would be:
Math.ceil(Math.max(alert - (free + incoming) * 0.15, 0)).
Target backordered stock
For businesses that allow to backorder, target backordered stock needed to fulfill open orders by using this rule:
Math.max(0 - (free + incoming), 0).
How to configure purchase order settings and set reorder rules
To set up reorder rule, navigate to Purchase Order Settings page, enter the reorder rule and save at the top right corner.