Question

calculate Inventory Turnissent Ratio and Inventencey Turnoven period 1,500 unit 606 un Maximum stuck level Minimum um stock treed Re-ardes quantity Issues 750 units 3,750 units​

Answer 1

Answer:

Formulas:

(i) Maximum Level of Stock = (Reorder Level + Reorder Quantity) – (Minimum rate of consumption x Minimum reorder period)

Maximum Level may be alternatively fixed as Safety Stock + Reorder Quantity or EOQ.

(ii) Minimum level of stock = Reorder level – (Average rate of consumption x Average reorder period)

(iii) Safety Stock = (Annual Demand/365) x (Maximum Reorder Period – Average Reorder Period)

(iv) Reorder level or Ordering level = Maximum rate of consumption × Maximum reorder period. Alternatively, it will be = safety stock + lead time consumption

[lead time consumption will be = (Annual consumption -s- 360) × lead time]

(v) Danger level = It is slightly below the minimum level. It is a level at which special efforts should be made to obtain supplies of materials, i.e.

Minimum rate of consumption × Emergency delivery time

(vi) Average Stock level = (Maximum stock level + Minimum stock level) x 14 or Minimum Stock level + 14 Reorder Quantity.

Obviously, the Reordering level is below the Maximum level, and Minimum level is below the Reordering level and the Danger level is below the Minimum level. Safety Stock is above minimum level.In above calculations, the following elements are important:

(a) Consumption Rate:

It is consumption or use of material per day (or per week) by production department. These rates will be maximum and minimum, the simple average of maximum and minimum rates is average consumption rate per day or per Week.