The Advised Reorder Period is the number of days Optiply recommends using as the reorder cycle for a product. It helps define how often you should place orders to keep stock levels optimised — not too often (to avoid unnecessary order costs), and not too late (to avoid stockouts). This advised period is automatically calculated when no manual value is provided for the Reorder Period field in the product settings.
How Is It Calculated?
The advised reorder period takes into account:
Fixed order costs (entered on the supplier page)
Minimum order value
Inventory holding costs (percentage, usually defaulted to 20%)
Purchase prices
Forecasted demand for the product
It aims to strike a balance between the cost of placing an order and the cost of holding inventory, by using an Economic Order Quantity (EOQ) (or cost-efficient): based logic behind the scenes.