Help!!!!!!!

HGANNON

Me and my friend are stuck on a question In a memo comment on the way in which the company uses its stock control levels in relation to light bulbs maximum level of stock 7000, minimum is 3000 and reorder level and quantity are both 4000?

Please Help :001_smile:

sarahwilson

I aren't sure if I am on the right track but if the minimum order level is 3000 maximum stock quantity is 7000 and you have to reorder 4000, you are getting up to your maximum stock quantity.

Depending on how long the stock lasts it doesnt seem sensible to go from minimum to maximum in one order.

SandyHood

Not the answer, but hopefully the sort of questions that will help.

I hope these questions don't read too much like a patronising teacher, but I suspect you know the answer so these may help you to prove you do.

1. Why do you think the company wants to have no more than 7,000 of these thin glass products at any given time?
2. Why do you think they don't want stocks to fall below 3,000?
3. They place an order every time stocks fall below 4,000. And yet the order placed is for 4,000 more and they have a stock maximum of 7,000. Why do you think these will all be true?
4. Why do you think they always order 4,000?
5. How does the level of stock in a business that say uses lighht bulbs in the products it sells affect the sales force, the production department and the accounts department?

Let me know if you are still not sure.

HGANNON

SandyHood wrote: »

I hope these questions don't read too much like a patronising teacher, but I suspect you know the answer so these may help you to prove you do.

1. Why do you think the company wants to have no more than 7,000 of these thin glass products at any given time?
2. Why do you think they don't want stocks to fall below 3,000?
3. They place an order every time stocks fall below 4,000. And yet the order placed is for 4,000 more and they have a stock maximum of 7,000. Why do you think these will all be true?
4. Why do you think they always order 4,000?
5. How does the level of stock in a business that say uses lighht bulbs in the products it sells affect the sales force, the production department and the accounts department?

Let me know if you are still not sure.

Sandy,

Here are my answers but still a bit unsure;

1)They have no more than 7000 due to they are perishable items and filaments could break quite easily
2)They dont want stocks to fall below 3000as this could halt production of cars
3)?????
4)They have a re-order level of 4000 to keep up with production
5)Level of stock affects the following people:-
Sales Guys- They would not be able to sell anything that is half finished, although they will want to keep stocks high
Production-lack of continuity of work
Accounts- They will have lack of money coming in?? But will be happy with a low stock valuation:001_unsure:

Do these seem ok?

SandyHood

good
do you feel able to answer your question now?

And a reorder level of 4,000 indicates when to place the order because there is an expectation of a delay between ordering and receiving a delivery (called lead time)
This enables the stores to continue issuing during the lead time, and by the time the delivery arrives the extra 4,000 will bring the stock level up to no more than 7,000. So I was looking for "lead time".