Calculate the Minimum stock level, Maximum stock level, Reordering level and Average stock level from the following information: (1) Minimum Consumption = 100 units per day (2) Maximum Consumption = 150 units per day (3)
CS Professional · Financial, Treasury and Forex Management · PYQS · June 2017
Calculate the Minimum stock level, Maximum stock level, Reordering level and Average stock level from the following information: (1) Minimum Consumption = 100 units per day (2) Maximum Consumption = 150 units per day (3) Normal Consumption = 120 units per day (4) Re-order period = 10(min)-15(max) units per day (5) Re-order quantity = 1500 units per day (6) Normal re-order period = 12 days
Answer & Explanation:
Reordering level = Maximum consumption x Maximum re-order period = 150 x 15 = 2250 units Minimum stock level = Reordering level - (Normal consumption x Normal re-order period) = 2250 - (120 x 12) = 810 units Maximum stock level = Reordering level + Reordering quantity - (Minimum consumption x Minimum re-order period) = 2250 + 1500 - (100 x 10) = 2750 units Average stock level = [(Maximum stock level + Minimum stock level)] ÷ 2 = (2750 + 810) / 2 = 1780 units
Topics: Financial Management
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