Unit 6 Stock levels - Re-order Qty

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
In the revision notes, chapter 2, lecturer example 2 you have to calculate Maximum level.<BR><BR>When calculating the maximum stock level the formulae is: reorder level+reorder qty - (min usage x min lead time) the problem I have is calculating the re order qty! I know the Economic order qty formulae however this only works when you have the cost of ordering stock and holding it. What if you don't have this information yet you need to work out the re - order qty in order to calculate the maximum level?<BR><BR>Can anyone help?

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Unit 6 Stock levels - Re-order Qty

    Hello,<BR><BR>Is the reorder quantity the maximum stock - minimum stock
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Unit 6 Stock levels - Re-order Qty

    Sorry I just read your message again and realised you said you didnt have the max stock? What was the actual question??
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Unit 6 Stock levels - Re-order Qty

    I thought the re-order qty was max usage x max lead time?<BR><BR>Anybody know for sure?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Unit 6 Stock levels - Re-order Qty

    Osborne Books say:-<BR>Re-order level=(Maximum usage x maximum lead time) + minimum stock level<BR><BR>Re-order quantity=Maximum stock level - minimum stock level<BR><BR>Maximum and minimum stock levels<BR>Maximum stock level = minimum stock level + re-order quantity<BR>Minimum order level = re-order level - (average usage x average lead time) <BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Unit 6 Stock levels - Re-order Qty

    Hi, thanks for replying!<BR><BR>The question was:<BR><BR>Maximum usage = 100kg per day<BR>Average usage = 75kg per day<BR>Minimum usage = 50kg per day<BR>Annual demand = 19500kg( 52 weeksx5 days x 75kg)<BR>Maximum lead time = 4 days<BR>Average lead time = 3 days<BR>Minimum lead time 2 days<BR><BR>Calculate <BR><BR>a) Re-Order level<BR>b) Minimum Level<BR>c) Maximum leverl<BR><BR>a) = 100kg x 4 days = 400kg <BR>b) = 400kg - (75kg x 3 days) = 175kg<BR>c) = 400kg + 2500kg - (50kg x 2 days) = 2800 kg<BR><BR>How did they arrive 2500 kg??<BR><BR>Thanks again for your help.<BR><BR>Carol-Ann
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Unit 6 Stock levels - Re-order Qty

    <br><br><< <i>I thought the re-order qty was max usage x max lead time?<BR><BR>Anybody know for sure?</i> >><br><br><BR><BR>I was told that the re-order qty was:<BR><BR>(max usage x max lead time) + buffer stock (if any)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Unit 6 Stock levels - Re-order Qty

    I'm still puzzled by this one?<BR>Are you sure the re-order qty wasn't also given in the question?<BR><BR>Otherwise, anyone know how to calculate the re-order quantity without using the EOQ formula?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Unit 6 Stock levels - Re-order Qty

    Hi <BR><BR>The re-order wty was defo not given. This is why I'm so puzzled at how they arrived at 2500kg as the re-order qty. their was no buffer stock or anything. I'm wondering if there is another way of calulating re order qty other than the EOQ way.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Unit 6 Stock levels - Re-order Qty

    This question also baffled me? I have no idea where they get the 2500 from. Would be interested if anyone knows!! Thought I was missing something!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Unit 6 Stock levels - Re-order Qty

    it's (budgeted usage x maximum lead time) + buffer stock

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