What triggers a new order in inventory management?

The trigger for a new order in inventory management is the inventory reorder point. This is a critical threshold that indicates when the stock level has decreased to a point where new inventory should be ordered. It is determined based on factors such as lead time for replenishment and average usage rates. When inventory levels fall to this predetermined point, it ensures that new stock can be received before inventory runs out, preventing stockouts that could disrupt operations or sales.

The inventory reorder point helps businesses maintain optimal inventory levels, balancing the costs associated with holding too much inventory against the risks of running out. It is a key component of effective inventory management practices and is essential for ensuring a smooth flow of operations.