The reorder point is an inventory management system that compares production needs to available inventory balances and determines when orders should be placed for various items on a firm's bill of materials.

Question

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The reorder point is a specific inventory level at which an order is triggered to replenish the stock of an item, not a system that compares production needs to inventory balances. It is primarily used to ensure that stock levels do not fall below the levels required to maintain production until new stock arrives.

The Reorder Point Is an Inventory Management System That Compares