Calculate Reorder level, Minimum level and Average stock level from the following information of X Ltd. : Normal usage 50 units per week, Minimum usage 25 units per week, Maximum usage 75 units per week, Re-order quantit
CS Executive · Financial and Strategic Management · PYQS · December 2018
Calculate Reorder level, Minimum level and Average stock level from the following information of X Ltd. : Normal usage 50 units per week, Minimum usage 25 units per week, Maximum usage 75 units per week, Re-order quantity 300 units, Re-order period 4 to 6 weeks
Answer & Explanation:
Answer 2(b) Reorder Level = (Maximum Usage * Maximum Delivery Time) = 75 * 6 = 450 units Minimum Level = Reorder Level - (Normal Usage * Average Delivery Time) = 450 - (50 * 5) = 200 units Average Stock Level = Minimum Level + (Reorder Quantity/2) = 200 + (300/2) = 350 units
Topics: Financial Management
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