Questions · Q7
Q.Compute the Re-order Level, Minimum Level, Maximum Level, Average Stock Level and Danger Level from the following:
Minimum consumption: 50 units per week
Maximum consumption: 150 units per week
Normal consumption: 100 units per week
Re-order period: 4 to 6 weeks
Re-order Quantity: 800 units
Time required for emergency purchase: 2 weeks
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Start your 14-day free trial to unlock the full solution →- Re-order Level = Maximum Consumption × Maximum Re-order Period = 150 × 6 = 900 units
- Minimum Level = Re-order Level − (Normal Consumption × Normal Re-order Period) Normal Re-order Period = (4 + 6) ÷ 2 = 5 weeks = 900 − (100 × 5) = 900 − 500 = 400 units
- Maximum Level = Re-order Level + Re-order Quantity − (Minimum Consumption × Minimum Re-order Period) = 900 + 800 − (50 × 4) = 1,700 − 200 = 1,500 units
- Average Stock Level = Minimum Level + ½ × Re-order Quantity = 400 + (800 ÷ 2) = 400 + 400 = 800 units
- Danger Level = Average Consumption × Emergency Lead Time = 100 × 2 = 200 units …
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