Questions · Q10
Q.From the following data, calculate
(a) Re-order Level,
(b) Minimum Level,
(c) Maximum Level,
(d) Average Stock Level and
(e) Danger Level:
Minimum consumption: 150 units per week
Maximum consumption: 450 units per week
Normal consumption: 300 units per week
Re-order period: 4 to 6 weeks
Re-order Quantity: 1,800 units
Time required for emergency purchase: 2 weeks
Minimum consumption: 150 units per week
Maximum consumption: 450 units per week
Normal consumption: 300 units per week
Re-order period: 4 to 6 weeks
Re-order Quantity: 1,800 units
Time required for emergency purchase: 2 weeks
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13% · 10/78 Questions
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Start your 14-day free trial to unlock the full solution →- Re-order Level = Maximum Consumption × Maximum Re-order Period = 450 × 6 = 2,700 units
- Minimum Level = Re-order Level − (Normal Consumption × Normal Re-order Period) Normal Re-order Period = (4 + 6) ÷ 2 = 5 weeks = 2,700 − (300 × 5) = 2,700 − 1,500 = 1,200 units
- Maximum Level = Re-order Level + Re-order Quantity − (Minimum Consumption × Minimum Re-order Period) = 2,700 + 1,800 − (150 × 4) = 4,500 − 600 = 3,900 units
- Average Stock Level = Minimum Level + ½ × Re-order Quantity = 1,200 + (1,800 ÷ 2) = 1,200 + 900 = 2,100 units
- Danger Level = Average (Normal) Consumption × Emergency Lead Time = 300 × 2 = 600 units …
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