Question

miminum level formula
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Answer 1

Answer:

..............................................

Explanation:

Answer 2

Explanation:

Minimum Stock Level = Re-order level – (Normal consumption per week x Average time required to obtain supplies)

Let’s calculate Re-order level fist:

= Maximum Consumption per week x Maximum time required to obtain suppliers

= 9,000 units x 6 weeks

= 54,000 units

Now we can calculate minimum stock level as:

= 54,000 units – (6,000 units x 5 weeks)

= 54,000 – 30,000

= 24,000 units

Note: Average time required to obtain suppliers has been ascertained as follows:

= (Minimum period + Maximum Period) / 2

= 4 weeks + 6 weeks / 2

= 5 weeks