Calculate reorder point, also known as reorder level or order quantity, is a term used in business to define the optimal balance between inventory and demand. It is calculated in order to determine how much of a particular item should be kept in stock and when an order should be placed so that customer demand can be met without overstocking. The goal of calculating reorder point is to ensure that any out-of-stock situations are avoided while keeping costs manageable. In other words, it’s all about finding the right balance: having enough items on hand to meet customer demand, but not so many that money is wasted on overstocking.