Inventory Management

This text discusses the calculation of re-order level, maximum level, minimum level, and average level for an inventory system. The text uses an example to illustrate the calculation of these levels.

Questions

1. What is the re-order level?
2. What is the maximum level?
3. What is the minimum level?
4. What is the average level?

Answers

1. The re-order level is equal to the maximum consumption multiplied by the maximum re-order period. In the example, the re-order level is 1050 units.
2. The maximum level is equal to the re-order level plus the re-order quantity minus the minimum consumption multiplied by the minimum delivery period. In the example, the maximum level is 1300 units.
3. The minimum level is equal to the re-order level minus the normal consumption multiplied by the normal delivery period. In the example, the minimum level is 450 units.
4. The average level is equal to the re-order level plus the maximum level plus the minimum level divided by 3. In the example, the average level is 800 units.