Question

Calculate Minimum Level from the data given below.
Normal Usage: 200 Unit per week
Minimum Usage: 100 Unit per week
Maximum Usage: 300 Unit per week
Reorder Quantity: 1600 Unit
Reorder period (Lead Time): 8 to 12 weeks.​

Answer 1

Step-by-step explanation:

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Answer 2

Given,

Normal usage = 200 units per week

Minimum usage = 100 units per week

Maximum usage = 300 units per week

Reorder quantity = 1600 units

Reorder usage (lead time) = 8 to 12 weeks

To find,

Minimum level

Solution,

First, calculate reorder level, its formula is given below:

Reorder level = Maximum consumption per week × maximum time required

Putting the values in the formula:

Reorder level = 300 units per week × 12 weeks

Reorder level = 3600units

The formula to calculate the minimum stock level is as follows:

Minimum stock level = Reorder level -(Normal consumption per day/per week etc × normal delivery per time)

Putting the values in the formula:

Minimum stock level = 3600 units - (200 units per week × 10 weeks)

Minimum stock level = 3600 units - 2000 units

Minimum stock level = 1600 units

Hence, the minimum level of the data is 1600 units.