We read your photo as:

Calculate the reorder level, minimum stock level, and maximum stock level for inventory management.

Accounting

ScanSolve AI Answer

Step-by-step solution

10 steps

Here are the calculations for the required stock levels:

c) i. Reorder level

  1. Identify the formula for Reorder Level.

    Reorder Level=Maximum Consumption×Maximum Reorder Period\text{Reorder Level} = \text{Maximum Consumption} \times \text{Maximum Reorder Period}
  2. Substitute the given values.

    Reorder Level=1200 units/day×24 days\text{Reorder Level} = 1200 \text{ units/day} \times 24 \text{ days}
  3. Calculate the Reorder Level.

    Reorder Level=28,800 units\text{Reorder Level} = 28,800 \text{ units}

    The reorder level is 28,800 units\boxed{\text{28,800 units}}.

    c) ii. Minimum stock level

  4. Identify the formula for Minimum Stock Level.

    Minimum Stock Level=Reorder Level−(Normal Consumption×Normal Reorder Period)\text{Minimum Stock Level} = \text{Reorder Level} - (\text{Normal Consumption} \times \text{Normal Reorder Period})
  5. Calculate the Normal Reorder Period.

    Normal Reorder Period=Minimum Reorder Period+Maximum Reorder Period2\text{Normal Reorder Period} = \frac{\text{Minimum Reorder Period} + \text{Maximum Reorder Period}}{2} Normal Reorder Period=12 days+24 days2=36 days2=18 days\text{Normal Reorder Period} = \frac{12 \text{ days} + 24 \text{ days}}{2} = \frac{36 \text{ days}}{2} = 18 \text{ days}
  6. Substitute the values into the Minimum Stock Level formula.

    Minimum Stock Level=28,800 units−(900 units/day×18 days)\text{Minimum Stock Level} = 28,800 \text{ units} - (900 \text{ units/day} \times 18 \text{ days}) Minimum Stock Level=28,800 units−16,200 units\text{Minimum Stock Level} = 28,800 \text{ units} - 16,200 \text{ units}
  7. Calculate the Minimum Stock Level.

    Minimum Stock Level=12,600 units\text{Minimum Stock Level} = 12,600 \text{ units}

    The minimum stock level is 12,600 units\boxed{\text{12,600 units}}.

    c) iii. Maximum stock level

  8. Identify the formula for Maximum Stock Level.

    Maximum Stock Level=Reorder Level+Reorder Quantity−(Minimum Consumption×Minimum Reorder Period)\text{Maximum Stock Level} = \text{Reorder Level} + \text{Reorder Quantity} - (\text{Minimum Consumption} \times \text{Minimum Reorder Period})
  9. Substitute the values into the formula.

    Maximum Stock Level=28,800 units+32,000 units−(800 units/day×12 days)\text{Maximum Stock Level} = 28,800 \text{ units} + 32,000 \text{ units} - (800 \text{ units/day} \times 12 \text{ days}) Maximum Stock Level=60,800 units−9,600 units\text{Maximum Stock Level} = 60,800 \text{ units} - 9,600 \text{ units}
  10. Calculate the Maximum Stock Level.

    Maximum Stock Level=51,200 units\text{Maximum Stock Level} = 51,200 \text{ units}

    The maximum stock level is 51,200 units\boxed{\text{51,200 units}}.

Was this helpful?

Still stuck on this one?

Ask a follow-up, and the answer starts from this question.

Got a different question?Ask your own question