What is 'reorder point method' in SAP SCM-APO-SNP - Supply Network Planning (SNP)?

reorder point method - Overview

• Component: SCM-APO-SNP

• Component Name: Supply Network Planning (SNP)

• Description: A stocking up procedure for warehouse stock. Existing warehouse stock is used as a basis for making a purchase order decision. When stock falls below a specific level the reorder point, procurement is triggered.

reorder point method - Details

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  Key Concepts: 
  The Reorder Point Method is a supply chain planning tool used in SAP's Supply Network Planning (SNP) component. It is used to determine when to order new stock and how much to order. The Reorder Point Method uses a combination of safety stock, lead time, and demand forecasts to calculate the optimal reorder point. 
  
  How to use it: 
  The Reorder Point Method is used to determine the optimal reorder point for a given product. This is done by calculating the safety stock, lead time, and demand forecasts for the product. The safety stock is the amount of stock that should be kept on hand in case of unexpected demand or supply disruptions. The lead time is the amount of time it takes for a new order to arrive after it has been placed. The demand forecast is an estimate of how much demand there will be for the product in the future. Once these values have been calculated, the Reorder Point Method can be used to determine when to place an order and how much to order. 
  
  Tips & Tricks: 
  When using the Reorder Point Method, it is important to ensure that the safety stock, lead time, and demand forecasts are accurate. This will help ensure that orders are placed at the optimal time and with the correct quantity. Additionally, it is important