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Question
Faina Electronics Pvt. Ltd. provides following information regarding an item
Normal usages:50 per week
Maximum usages : 75 per week
Minimum usages : 25 per week
Re-order quantity : 300
Re-order period : 4 to 6 weeks
What will be the Re-order-Level of the company ?
Faina Electronics Pvt. Ltd. provides following information regarding an item
Normal usages:50 per week
Maximum usages : 75 per week
Minimum usages : 25 per week
Re-order quantity : 300
Re-order period : 4 to 6 weeks
What will be the Re-order-Level of the company ?
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Solution
The correct option is C 450 units
Re Order level is that level of inventory where organization has to take a call to give the order for inventory to have the smooth operation. There are two major components for deciding the re order level i.e. Average usage and lead time.
Re order Level= Average usage * Maximum Lead Time = 75 * 6 = 450 Units
Re Order level is that level of inventory where organization has to take a call to give the order for inventory to have the smooth operation.
There are two major components for deciding the re order level i.e. Average usage and lead time.
Re order Level= Average usage * Maximum Lead Time
= 75 * 6
= 450 Units
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