Question

5. The following data pertains to material X: Supply period Consumption rate: 4 to 8 months Maximum 600 units per month Minimum 100 units per month 300 units per month Normal Yearly 3600 units Storage costs are 5% of stock value. Ordering costs are Rs. 400 per order. Price per unit of material Rs. 64. Calculate: i) Re-order level ii) Minimum stock level iii) Maximum stock level iv) Average stock level​

Answer 1

Answer:

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Step-by-step explanation:

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Answer 2

Given:

Supply period Consumption rate: 4 to 8 months

Maximum 600 units per month

Minimum 100 units per month

Normal Yearly 3600 units

Storage costs are 5% of stock value.

Ordering costs are Rs. 400 per order.

Price per unit of material Rs. 64

To Find: i) Re-order level ii) Minimum stock level iii) Maximum stock level iv) Average stock level​

Solution:

1]. Re-order level

Reorder level of stock = Minimum stock + Average consumption during the normal delivery time

Average consumption during the normal delivery time = 4+8/2= 6

Reorder level of stock = 100+ 6 = 106 units

Re-order level is 106 units.

2]. Minimum stock level

Average Stock level = Maximum stock level + Minimum stock level

Minimum stock level = 3600- 600 = 3000 units

The minimum stock level is 3000 units.

3]. Maximum stock level

Average Stock level = Maximum stock level + Minimum stock level

Maximum stock level = 3600 - 100= 3500

The maximum stock level is 3500 units

4]. Average stock level​

Average stock level​= Minimum stock Level + 1/2 of Reorder Quantity

Average stock level​ = 100 + 1/2 ×106

= 100+ 53 = 153 units.

The average stock level​ is 153 units.

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