What does the reorder point refer to in inventory management?

The reorder point is defined as the minimum stock level that triggers a reorder of inventory before it runs out. When inventory levels drop to this specific point, it indicates that additional supplies should be ordered to maintain adequate stock on hand, ensuring that operations can continue smoothly without interruption. This concept is crucial in inventory management as it helps prevent stockouts and ensures that there is always enough product available to meet demand.

Understanding the reorder point helps organizations plan their purchases and manage their inventory more effectively. The other choices pertain to different aspects of inventory management, such as lead time and maximum inventory limits, but do not define the specific trigger point for restocking inventory.