Reorder level is the stock level of a particular item of inventory, at which a firm needs to place an order for the fresh supply of the item; whereas reorder quantity is the magnitude or the number of units to be ordered in a new purchase order for the fresh supply of a particular inventory item.
While reorder level gives a signal regarding when to place a new order for the fresh supply of an inventory item; reorder quantity makes obvious the size of a particular order.
While reorder level provides an answer to the question ‘when’; reorder quantity provides an answer to the question ‘how much’
ROL - gives answer to at what level of stock the firm should order for purchase (i.e. When to order?) ROQ - gives answer to at what quantity such order is placed in which carry cost and order cost is at minimum (i.e. How much to order?)
CAclubindia
