Calculate Minimum Level from information given below Consumption 200 units 400 units Re order Period...........

Costing - Phase (I & II) Basics of Cost Control and Analysis

Calculate Minimum Level from information given below:

Consumption: 200 units-400 units

Re-order Period: 15 days- 30 days

5,000 units

5,250 units

6,000 units

4,000 units

Minimum level/safety stock level is the level below which stock is not allowed to fall except in abnormal circumstances or in emergencies.

It is calculated as:

Re-order level – (Normal Consumption x Normal Re-order Period)

Where, Normal Consumption =

Minimum Consumption (+) Maximum Consumption /2

Normal Re-order Period =

Minimum Re-order Period (+) Maximum Re-order Period /2

In given problem, Re-order level is 12,000 units

Minimum level= 12,000-(300 x 22.5) = 5,250 units

Submit Error