What is a Reorder Point?

A reorder point is the stock level at which a new purchase order should be placed so that replenishment stock arrives before existing stock is exhausted. It is calculated by combining average daily demand with supplier lead time and a safety stock buffer. Getting reorder points right reduces both stockouts and unnecessary overstock. Microsoft Dynamics 365 Business Central stores reorder point values per item and uses them in the planning worksheet to generate replenishment suggestions automatically.

How reorder points work in Business Central

Each item in Business Central can be configured with a reorder point, a safety stock quantity and a reorder quantity. When the planning worksheet runs, Business Central compares current stock levels (adjusted for open orders and demand) against the reorder point. Items falling below their reorder point appear as planning lines with a suggested purchase order quantity and expected order date. Buyers review and approve the suggestions before orders are released to suppliers. Business Central recalculates these figures each time the planning worksheet runs, so the suggestions reflect the most current demand and stock position.

Reorder points in practice

A distributor with 800 active SKUs configures reorder points for each item in Business Central, replacing the manual spreadsheet review that previously took a buyer two days each week.
An operations manager uses Business Central to run the planning worksheet each morning and release replenishment orders to suppliers before 9am, reducing stockout incidents by keeping orders ahead of demand.
A purchasing team adjusts reorder points seasonally in Business Central to reflect higher demand periods, ensuring safety stock levels increase before peak trading without over-ordering throughout the year.
A finance director reviews slow-moving items where reorder points are set too high, releasing working capital tied up in excess stock.

How Advantage configures reorder points in Business Central

Advantage helps distribution businesses set up item planning parameters in Business Central, including reorder points, safety stock, reorder quantities and supplier lead times. For clients with large item catalogues, we run data migration and cleansing exercises to populate planning parameters accurately before going live, so the planning worksheet produces reliable suggestions from day one.

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Frequently Asked Questions

Common questions about reorder points and Business Central inventory planning.

How is a reorder point calculated?

The standard formula is: reorder point = (average daily demand x supplier lead time in days) + safety stock. For example, if a product sells 20 units per day, the supplier takes 5 days to deliver and you want 30 units of safety stock, the reorder point is (20 x 5) + 30 = 130 units.

What is the difference between a reorder point and a minimum stock level?

A reorder point triggers a purchase order when stock falls to that level. A minimum stock level (or safety stock) is the buffer held below the reorder point to cover unexpected demand or supplier delays. In Business Central, both can be configured per item and used together in the planning worksheet.

Can Business Central generate purchase orders automatically from reorder points?

Yes. Business Central's planning worksheet runs MRP calculations based on reorder points, current stock levels, open orders and supplier lead times. It then suggests purchase orders for items below their reorder point, which a buyer can review and release with a single action.