Question

) In a company weekly minimum and maximum consumption of material A are

25 and 75 units respectively. The reorder quantity as fixed by the company is

350 units. The material is received within 8 to 10 weeks from issue of supply

order. Calculate minimum level and maximum level of material A.​

Answer 1

Answer:

Explanation:

Reorder level = maximum consumption × maximum reorder period

= 75 ×10

= 750 units

Maximum stock level

= Reorder level + Reorder quantity - (minimum consumption ×minimum reorder

= 750 + 350 - (25 × 8)

= 750 + 350 - 200

= 750 + 150

= 900 units

Normal consumption = maximum consumption + minimum consumption

= 25 + 75 /2

= 100 /2

= 50

Minimum stock level

= Reorder level - ( normal consumption ×Normal reorder period)

= 750 - (50 ×9)

= 750 - 450

= 300× units

Normal reorder period= maximum reorder period + minimum reorder period

= 8+ 10 /2

= 18/2= 9