29. Reorder quantity 2000 units, Lead time 4-8 weeks, Usage - maximum 500 units per week Normal usage 400 units per week, Minimum usage 300 units per week. The maximum stock level is ?!
Answers
Explanation:
(i) Maximum Consumption = 200 units per day
(ii) Minimum Consumption = 120 units per day
(ii) Normal Consumption =160 units per day
(iv) Reorder period = 10-15 days
(v) Reorder quantity = 1,600 units
ADVERTISEMENTS:
(vi) Normal reorder period = 10 days.
Solution:
Reordering Level = Maximum Consumption x Maximum Reorder period
= 200 units X 15 = 3,000 units Minimum Stock Value = Reordering Level – (Normal Consumption x Nominal Reordering Period)
= 3,000 – (160 X 10) = 3,000 – 1,600 = 1,400 units
Maximum Stock Level = Reordering Level + Reorder Quantity – (Minimum Consumption x Reorder period) = 3,000 + 1,600 – (120 X 10) = 3,000 + 1,600 – 1,200 = 2,400 units.
Given:
Reorder quantity = 2000 units
Maximum units = 500
Normal units = 400
Minimum units = 300
Lead time = 4-8 weeks
To Find:
The maximum stock level
Solution:
To determine maximum stock level, other quantities are to be calculated, thus -
Re order level = Max consumption x Max reorder period
= 500 x 8
= 4000
Minimum level = Reorder level - ( Average consumption x Average reoder period)
= 4000 - ( 400 x 6)
= 4000 - 2400
= 1600
Maximum stock level = Reorder level + reorder quantity - ( Min consumption x Min reorder period)
= 4000 + 2000 - ( 300 x 4)
= 6000 - 1200
= 4800
Answer: The maximum stock level is 4800 units