<p>This paper treats a continuous review stochastic inventory system with retrial demands. We assume that demand time points form a Poisson process. The demands which occur during stock out period enter an orbit of infinite size. These orbiting demands retry for their demand after a random time, which is assumed to be exponential distribution. We assume constant retrial policy for the orbiting demands. The inventory is replenished by an outside supplier with flexible reorder point. The lead times for the order is exponential distribution. Formulating this model as a Markov decision problem, we characterize the optimal replenishment policy as a monotonic threshold function of reorder point under the discounted cost criterion. We present some numerical examples to illustrate the result.</p>