Multiple choice

If the re-order level is 4,500 units and Economic Order Quantity is 6,000 units, minimum usage is 75 units and minimum lead time is 25 days, calculate maximum level of stock.

  1. 9,000 units

  2. 8,625 units

  3. 8,500 units

  4. 8,750 units
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B Correct answer
Explanation

 It is 8,625 units.  Maximum Level  = Re-order level + EOQ - ( Minimum usage X Minimum lead time )                             =  4,500  + 6,000 - ( 75 X 25 )                             =   10,500 - ( 1,875 )                            =   10,500 - 1,875 = 8,625 units 

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