Smart Inventory: Reorder Point & Safety Stock

Demand

Avg daily demand 30

Demand variability 10

Replenishment policy

Reorder point 120

Order quantity 150

Supplier lead time (days) 5

Sim speed (days/sec) 1.5

Stock on hand

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Simulated day

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Service level

–

Orders in transit

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Holding cost total

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Stockout cost total

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How it works

The glowing column is the warehouse's stock on hand — its height rises when a supplier delivery arrives and falls continuously as daily demand is drawn against it. Two translucent rings mark policy thresholds: the amber ring is the reorder point (ROP) — the moment inventory position (stock plus anything already on order) drops to or below it, a new order of fixed quantity Q is placed. The green ring beneath it is the safety stock — the buffer meant to absorb demand variability during the supplier's lead time. Small crates gliding in from the edge represent orders already placed, arriving after the lead time.

reorder when: stock + on_order ≤ ROP
safety stock ≈ ROP − avg_demand · lead_time
holding_cost += stock · h · dt
stockout_cost += unmet_demand · p · dt

Avg daily demand / variability — the mean and day-to-day noise of how many units customers pull each day; higher variability makes a fixed reorder point riskier.
Reorder point (ROP) — raise it to reorder earlier and hold more safety stock; lower it to save holding cost but risk running out before the next delivery arrives.
Order quantity (Q) — how much is ordered each time; larger orders mean fewer deliveries but a bigger, costlier pile of stock sitting between them.
Lead time — days between placing an order and it landing on the floor; longer lead times need either a higher ROP or more safety stock to cover the same risk.

Real-world relevance: this is exactly the (s, Q) inventory policy smart systems tune automatically — instead of a fixed ROP, they continuously re-forecast demand and lead time to set a reorder point that hits a target service level at the lowest combined holding + stockout cost.

Healthy stock Below reorder point Below safety stock Incoming order

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