annual consumption of a material of a company is 100000 units at rs 2.40 per unit .Each order coat rs .90 and carrying cost is 15% of the annual average inventory value . company operates 250 days per years . The procurement time is 10 days and safty stick level is 1000 units . calculate maximum stock level
Answers
Answer:
other factors include a circle
Answer:
Annual Consumption( A) = 100000 units
Order Cost (B)= Rs.90
Carrying Cost per unit per annum (C)= Rs. 2.40 × 15%
EOQ/ Re Order Quantity = √2AB÷ C
=√ 2X100000X90÷2.40X15%
= √50000000
= 7071 units
Re order level= Safety Stock+ (Average Rate of Consumption X Lead time)
Re Order Level= 1000+ ( 283 × 10) { Avarage rate of Consumption- Note no:- i}
= 3830 units
Maximum Stock Level= Re- Order Level - (Minimum Consumption × Minimum reorder period) + Re order quantity
Maximum Stock Level= 3830 - ( 283 × 10) + 7071 units
= 8071 units (Ans)
Working Notes:-
(i) Calculation of Avarage Rate of Consumption or Minimum Consumption-
No of Orders = Operation days/ Procurement time =250/10 = 25
Avarage Rate of Consumption or Minimum Consumption = EOQ/ No of Orders = 7971/25 = 283 units.