Ordering Point or Re-order Level related solved problems


Problem 
From the following information, you are required to determine:
(a) Ordering Point or Re-order Level
(b) Minimum Limit or Minimum Stock Level
(c) Maximum Limit or Maximum Stock Level
(d) Danger Level
Maximum daily requirement                              800 units
Time required to receive emergency
                                                supplies            4 days
Average daily requirement                                 700 units
Minimum daily requirement                               600 units
Time required for fresh supply               one month
                                                                        (30 days)
Economic Order Quantity                                 29000 units
Solution:
(a) Ordering Point = Maximum daily requirement × lead time
Ordering Point or Re-order Level = 800 × 30 = 24000 Units
(b) Minimum Limit = Ordering Point – Average Consumption
Minimum Limit or Level = 24000 – (700 × 30)
Minimum Limit or Level = 24000 – 21000 = 3000 Units
(c) Maximum Limit = Ordering Point – Minimum Consumption
while the replacement order is outstanding + E.O.Q
Maximum Limit or Maximum Stock Level =
            24000 – (600 × 30) + 29000
Maximum Limit or Maximum Stock Level =
            24000 – 18000 + 29000 = 35000 Units
(d) Danger Level = Average daily consumption × time required to receive emergency supply
Danger Level = 700 × 4 = 2800 Units

Comments

Post a Comment

Popular posts from this blog

What is the Dynamic Theory of Profit

Image
Clark's Dynamic Theory of Profit And Its Criticism The Dynamic Theory of Profit is associated with the name of an American Economist, J. B. Clark. In the world of reality, according to J. B. Clark, profit arises only in a dynamic economy. An economy is said to be dynamic when there is a change in population growth or change in the method of production or a change in the consumer’s wants, etc. A society which is without these changes is called a static society. In a static society, only monopoly profits continue to exist. All other economic profits are gradually eliminated by competition. In a dynamic society, an entrepreneur is always confronted with continuous unpredictable changes in demand for his product. The variation in demand may take place due to changes in fashions, tastes, the standard of living, distribution of income, population, new inventions, international repercussions, technological advances, etc. A prudent entrepreneur will always keep an eye on future demand
Read more

Compare the anatomy of Bifacial and Isobilateral leaves

BIFACIAL LEAF: It is also called dorsiventral leaf. This leaf is more strongly illuminated on upper surface than on lower surface. This unequal illumination induces a difference in the internal structure between upper and lower sides. Its internal structure shows: (1)        Upper Epidermis This is single layer of cells with thick cuticle which checks excessive evaporation of water from the surface. It does not contains chloroplasts, stomata are also absent. (2)        Lower Epidermis This is also single layer but with a thin cuticle. It bears many stomata, two guard cells of which contain some chloroplast, none are present in the epidermal cells. Internal to each stomata is large cavity called respiratory cavity. Lower epidermis of leaf is meant for exchange of gases (oxygen and carbon dioxide) between the atmosphere and the plant body. Excess water also evaporates from lower epidermis. (3)        Mesophyll The ground tissue lying between upper epidermis and th
Read more

osmoregulation in terrestrial and aquatic animals

Mechanism of osmoregulation is very important for all groups of animals whether inhibting land or water. Unlike plant cells, animal cells when placed in hypotonic solution burst due to the continuous absorption of water. On the contrary they would shrink and die if constantly placed in hypertonic solution. Normally uptake and loss of water are in balance for proper survival of cell. (1)        Osmoregulation in terrestrial animals: Terrestrial animals are more likely to loose water by evaporation through their permeable surfaces exposed to amsophere. Among various animal groups only Arthropods and vertebrates became the most successful land dwellers. They have developed number of strategies to maintain osmoregulation of their body fluid. (a) Water proof external coverings: To prevent water loss through external surfaces, vertebrates like reptiles, birds and mammals have water proof keratinized epidermis. Similarly the insects have developed external water proof layer called
Read more