Minimum Stock Level = 54,000 units – (6,000 units x 5 weeks) Reorder Level = Maximum Consumption per week x Maximum time required to obtain suppliersĪs the next step, we can calculate minimum stock level as follows: Since we know the above mentioned formula for calculating the minimum stock level, let’s start by calculating the reorder level first. Time required for emergent supplies: 1 weekĬalculate the minimum stock level.Time required for delivery = 4 to 6 weeks.Minimum consumption = 3,000 units per week.Maximum consumption = 9,000 units per week.In a manufacturing operation, a particular material is used as follows: Solution 1īased on this information, the minimum stock level can be calculated as follows:
Normal consumption = 300 units per weekĬalculate the minimum stock level.Suppose we have the following information: The minimum stock level can be calculated by applying the following formula: Minimum quantity of materials that can be procured advantageously.Production requirements in terms of materials.Time needed to procure fresh supplies under top priority conditions.Average rate of consumption of materials.The main factors to consider when fixing the minimum stock level are: Main Factors Involved in Fixing the Minimum Stock Level The main objective of fixing the minimum stock level, and thus the minimum level of materials, is to ensure that the required quantity of each item is available at all times. Furthermore, management must prioritize the acquisition of fresh supplies. If the actual stock falls below the minimum stock level, there is a risk of stopping production. For this reason, the minimum stock level is commonly known as safety stock or buffer stock. The fixing of this level acts as a safety measure. In other words, a minimum stock level is a minimum quantity of a particular item of material that must be kept at all times. Updated on SeptemMinimum Stock Level: Definition and ExplanationĪ minimum stock level is a threshold value that indicates the level below which actual material stock items should not normally be allowed to fall.
0 kommentar(er)
