Optimal Order Time

What is Optimal Order Time?

The optimal order time is the time when the order must be placed at the latest if there is not to be any delay in the production or delivery of goods. The order is thus placed so that it occurs exactly when it is needed. Basically, the optimal ordering time depends strongly on whether a quantity-based or deadline-based ordering procedure is in use. With the quantity-based procedure, a purchase order is always triggered as soon as a certain lower limit, the so-called reorder level, is reached. With the date-based procedure, on the other hand, an order is placed at fixed times, which is why this procedure should only be used for articles that have a relatively even consumption. To determine the optimal ordering time, the optimal order quantity is first necessary. In addition, the delivery time and sales rate should be precisely known.