This accounting problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
ScanSolve AI Answer
Here are the calculations for the required stock levels: c) i. Reorder level Step 1: Identify the formula for Reorder Level. Reorder Level = Maximum Consumption × Maximum Reorder Period Step 2: Substitute the given values. Reorder Level = 1200 units/day × 24 days Step 3: Calculate the Reorder Level. Reorder Level = 28,800 units The reorder level is 28,800 units. c) ii. Minimum stock level Step 1: Identify the formula for Minimum Stock Level. Minimum Stock Level = Reorder Level - (Normal Consumption × Normal Reorder Period) Step 2: Calculate the Normal Reorder Period. Normal Reorder Period = Minimum Reorder Period + Maximum Reorder Period2 Normal Reorder Period = 12 days + 24 days2 = 36 days2 = 18 days Step 3: Substitute the values into the Minimum Stock Level formula. Minimum Stock Level = 28,800 units - (900 units/day × 18 days) Minimum Stock Level = 28,800 units - 16,200 units Step 4: Calculate the Minimum Stock Level. Minimum Stock Level = 12,600 units The minimum stock level is 12,600 units. c) iii. Maximum stock level Step 1: Identify the formula for Maximum Stock Level. Maximum Stock Level = Reorder Level + Reorder Quantity - (Minimum Consumption × Minimum Reorder Period) Step 2: Substitute the values into the formula. Maximum Stock Level = 28,800 units + 32,000 units - (800 units/day × 12 days) Maximum Stock Level = 60,800 units - 9,600 units Step 3: Calculate the Maximum Stock Level. Maximum Stock Level = 51,200 units The maximum stock level is 51,200 units. That's 2 down. 3 left today — send the next one.