Controlled expected lead-time demand · controlled safety stock

Reorder-Level Arithmetic Worksheet

Add a separately validated forecast of demand during replenishment lead time to a separately approved safety-stock quantity.

No invented safety stockNo automatic roundingNo order or criticality verdict

Arithmetic only—not an inventory policy or purchase authorization. The worksheet does not forecast intermittent demand, estimate lead-time uncertainty, set a service level, determine a critical spare, calculate an order quantity, round to packs, value inventory or decide when a purchase order is released. Those decisions belong to the controlled continuous/periodic-review policy and asset-risk process.

Controlled policy quantities

Expected demand during replenishment lead time, E[DDL]

Approved safety stock, SS

Stocking unit / UOM

Part / material / stock ID

Review policy and trigger definition

Inventory-position definition

Demand/failure history source and window

Demand model and E[DDL] derivation

Lead-time definition, data and variability

Safety-stock method and service objective

Asset criticality, credible failures and outage consequence

Supplier, repair, substitution and redundancy record

Shelf life, preservation, obsolescence and interchangeability

Order quantity, pack size and minimum-order policy

Controlled holding/stockout/procurement cost source

Policy/model source, revision and approval

Owner / reviewer

Review date

Notes and exclusions Optional: seasonal demand, common-mode failure, repair loop, cannibalization, staged location, quality/traceability, open purchase orders

E[DDL] is the expected demand over the complete, consistently defined replenishment lead time. It is not an unverified average-rate × average-time shortcut when demand/lead time are dependent or variable.
SS comes from the approved demand/lead-time distribution, service objective and consequence model—not the former generic “1–3 units,” maximum-demand shortcut or a copied Zσ√LT expression outside its assumptions.
The trigger is applied to the controlled inventory position and review policy, including on-order/backorder/reservation rules; this result is not automatically rounded or converted to an order quantity.
For critical spares, asset function, credible failures, monitoring warning, repair/substitution/redundancy, supplier risk, preservation, obsolescence and quality traceability are reviewed separately.

Documented arithmetic

Unrounded reorder level R

—

Expected lead-time demand

—

Approved safety stock

—

Equation and classification

R = E[DDL] + SS

R is the unrounded reorder level in the same stocking unit; E[DDL] is expected demand during replenishment lead time; SS is the approved safety stock. MIT OpenCourseWare states this continuous-review identity as “ROP = expected demand during order lead time + safety stock.” It is a general inventory-policy relation, not an ISO formula. How E[DDL] and SS are estimated—and whether/when inventory position triggers an order—depends on the controlled policy.

Model boundary and removed unsupported content

No automatic d × LT model. Multiplying average demand rate by average lead time requires consistent units and assumptions; variable/dependent demand and lead time require the validated lead-time-demand model. The worksheet accepts controlled E[DDL] directly.
No universal safety-stock formula. Zσ√LT is only one special case with specific distribution, independence, period and lead-time assumptions. “Typically 1–3 units,” “use maximum demand,” and “one spare after six months” were unsourced universal advice.
No automatic ceiling. Indivisibility, pack size, minimum order, review cadence and order quantity belong to the policy. The former Math.ceil silently changed the mathematical R.
No fake inventory value. R × unit purchase price is not automatically inventory value or carrying cost; valuation basis, on-order/backorders, quantities, currency, preservation, obsolescence and accounting policy were absent.
No fixed 20–25% holding cost. OpenStax identifies storage, insurance, obsolescence/spoilage and opportunity cost components but supplies no universal percentage for this spare-parts context.
No critical-spare verdict. DOE audits show that critical-spare programs must establish parts, sparing levels/reorder points and strategic staging, and define credible failures/advance warning; this two-number sum cannot perform that risk assessment.

Source traceability

Claim	Classification	Evidence
ROP = E{demand during lead time} + safety stock; E[DDL] may need demand and lead-time variability terms.	Official university course material	MIT OCW 15.760A, Lecture 18
WAPA audit findings included failure to demonstrate identified critical parts, sparing levels, reorder points and strategic locations; critical spares relate to credible failures and procurement warning.	Official US DOE audit evidence	DOE-OIG-24-30, 27 Sep 2024
Spare-parts ordering should use component failure history within an O&M program and preserve equipment/supplier records.	Official US DOE guidance	DOE FEMP O&M guidance
Holding costs include storage, insurance, obsolescence/spoilage and opportunity cost; ordering and stockout costs are separate.	Open peer-reviewed university textbook	OpenStax Principles of Finance §19.5

Accessed: 15 July 2026. None of these sources establishes a universal safety stock, holding-cost percentage, pack rounding or purchase authorization for the entered part.

Arithmetic reference example

If a validated model gives E[DDL] = 6.25 each and the approved safety stock is 2.5 each, R = 8.75 each. The worksheet intentionally does not round 8.75, decide the trigger condition or calculate the order quantity.

Questions

Why not enter monthly demand and lead-time months?

That multiplication is safe only under the validated demand/lead-time assumptions. Entering E[DDL] directly keeps the forecast model and its uncertainty visible.

Should the result be rounded up?

Only the controlled unit, pack, order-quantity and review policy can decide rounding. The arithmetic relation itself does not.

Does this set the stock for a critical spare?

No. Criticality, credible failure modes, warning time, repair and substitution options, redundancy, supplier risk, staging, preservation and obsolescence must be assessed separately.