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Difference between re order level and re order quantity

shilpi (student) (780 Points)

09 August 2020

what is the difference between reorder level and re order quantity ?

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Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 09 August 2020

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’

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Chartered Accountant Sivakumar (164 Points)
Replied 10 August 2020

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?)

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