Re-order Levels (ROL) are used to trigger consideration of stock re-ordering action. It is a stock level at which new stock must be ordered if replenishment is to arrive before a stock-out occurs, provided demand remains as predicted.
Annual requirements for low-value, low-bulk items can be estimated and ordered in a routine re-order cycle. There may be a need to set a maximum stock level (average demand plus safety stock).
At the routine re-order time current stock can be subtracted from the maximum to give the order quantity. In a fixed time, re-order cycle system the time at risk is re-order lead time plus the re-order cycle time. Calculation of the maximum stock level formula gives a higher level of safety stock.