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Re-Order Level Maximum Consumption X Lead Time

The document outlines calculations for inventory management levels including reorder level, minimum level, maximum stock level, danger level, and economic order quantity (EOQ). It determines that the reorder level is 117,000 units, minimum level is 45,125 units, maximum stock level is 127,125 units, danger level is 31,250 units, and EOQ is 286 units. These levels are calculated using formulas involving factors like consumption rates, lead times, reorder periods, order and carrying costs.

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Nabeela Shah
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60 views2 pages

Re-Order Level Maximum Consumption X Lead Time

The document outlines calculations for inventory management levels including reorder level, minimum level, maximum stock level, danger level, and economic order quantity (EOQ). It determines that the reorder level is 117,000 units, minimum level is 45,125 units, maximum stock level is 127,125 units, danger level is 31,250 units, and EOQ is 286 units. These levels are calculated using formulas involving factors like consumption rates, lead times, reorder periods, order and carrying costs.

Uploaded by

Nabeela Shah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Re-order Level = Maximum consumption x Lead Time

= 9000 x 13

= 117000 Units

Minimum Level = Reorder Level (Average Rate of consumption x Average Reorder Period)

= 11700 (6520 x 11.5)

= 45125 Units

Maximum Stock Level

(Reorder Level + Reorder Quantity) (Minimum Consumption Rate x Minimum Reorder


Period)

( 117000 + 45125) ( 3500 x 10)

(305875) (35000)

127125 Units

Danger level = normal rate of consumption Emergency delivery time

EOQ =

6250 x 5

31250 Units

2(annual usage in units)(order cost)/(annual carrying cost per unit )

2(500000)(12500)/12.5

102500/12.5

82000

286.35 units

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