Which of the following is not correct for calculation of re-ordering level of inventory?

CS Executive · Cost and Management Accounting · PYQS · June 2018
Which of the following is not correct for calculation of re-ordering level of inventory?
(A) Maximum consumption × Maximum re-order period
(B) (Maximum consumption × Lead time) + Safety stock
(C) Minimum level + Consumption during time lag period
(D) (Maximum consumption × Lead time) – Safety stock

Answer & Explanation:

Correct Answer: Option (D)

Official answer key: (D).

Topics: Cost and Management Accounting

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