Managing Inventories: The Reorder Point System

7 Pages Posted: 5 Apr 2010  

James R. Freeland

Darden Graduate School of Business Administration, University of Virginia

Elliott N. Weiss

University of Virginia - Darden School of Business

Robert Landel

University of Virginia - Darden School of Business

Abstract

Inventory replenishment concepts and tools are described.

Excerpt

UVA-OM-1394

Rev. Dec 1, 2010

MANAGING INVENTORIES: THE REORDER POINT SYSTEM

Inventories account for a significant percentage of the current assets of companies in industries ranging from hospitals and restaurants to manufacturing, wholesaling, and retailing firms. So, managing inventories is often the key aspect of improving a firm's working capital position and its return on assets. An inventory-management system is a set of procedures for managing the items in inventory. The focus in this note is on one such system—the reorder point system. Other inventory management systems and concepts have been addressed in separate technical notes.

The selection of a system for an item or group of items depends, in part, on the type of demand experienced by the item. There are two basic types of demand: forecast demand and scheduled requirements demand.

Forecast Demand

. . .

Keywords: control systems, inventory management, operations management, reorder point system

Suggested Citation

Freeland, James R. and Weiss, Elliott N. and Landel, Robert, Managing Inventories: The Reorder Point System. Darden Case No. UVA-OM-1394. Available at SSRN: https://ssrn.com/abstract=1584179

James R. Freeland (Contact Author)

Darden Graduate School of Business Administration, University of Virginia ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4831 (Phone)
434-243-7699 (Fax)

HOME PAGE: http://faculty.darden.edu/FreelandJ/

Elliott N. Weiss

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/html/direc_detail.aspx?styleid=2&id=4375

Robert Landel

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/landel.htm

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