Which formula correctly represents the reorder point when safety stock is included?

Which formula correctly represents the reorder point when safety stock is included?

• A. ROP = d × L − SS
• B. ROP = d × L ÷ SS
• C. ROP = SS × d × L
• D. ROP = d × L + SS

Answer: (D)

Reorder point with safety stock is about the stock level that triggers a replenishment, accounting for both expected consumption during the lead time and a cushion for variability. The expected usage during lead time is demand rate times lead time (d × L). Safety stock adds extra protection against stockouts due to unpredictable demand or delays, so you add it on to the lead-time demand. Therefore the correct formula is ROP = d × L + SS. Subtracting the safety stock would lower the trigger level and raise the risk of stockouts; multiplying or dividing by safety stock doesn’t align with the units or the purpose of the trigger point.

Reorder point with safety stock is about the stock level that triggers a replenishment, accounting for both expected consumption during the lead time and a cushion for variability. The expected usage during lead time is demand rate times lead time (d × L). Safety stock adds extra protection against stockouts due to unpredictable demand or delays, so you add it on to the lead-time demand. Therefore the correct formula is ROP = d × L + SS. Subtracting the safety stock would lower the trigger level and raise the risk of stockouts; multiplying or dividing by safety stock doesn’t align with the units or the purpose of the trigger point.