Page 274 - DCOM303_DMGT504_OPERATION_RESEARCH

Unit 13: Inventory Control

Reorder quantity A: 300 units Notes
B: 500 units
Reorder period A: 4 to 6 weeks
B: 2 to 4 weeks

Calculation for each component
1. Reorder level
2. Minimum level
3. Maximum level

4. Average level
Solution:

Tabular Presentation of stock levels

Levels A B
(a) Re-order Level (75 × 6) = 450 units (75 × 4 weeks) = 300 units
(Mx. Con × Mx. LT)
(b) Min. Level (450) – (50 × 5) = 200 units (300 – (50 × 3) = 150 units
(ROL – NC x NLT)
(c) Max. Level (450 + 300) – (25 × 4) = 650 (300 + 500) – (25 × 2) = 750
(ROL + ROQ/EOQ – Mn.C x units units
Mn.LT)
(d) Average Stock Level (200 + 650) (150 + 750)
Mn.L + Mx.L/2 or Mn.L + ½ 2 = 425 units 2 = 450 units
ROQ
200 + 1/2 (300) = 350 units 150 + ½ (500) = 400 units

Example: There are three items of materials, viz., X, Y, Z. The consumption pattern is as
follows:
X Y Z
Max. Consumption 1,000 1,500 1,200
Min. consumption 400 300 600
Avg. consumption 700 900 900
Re-order quantity 800 1,200 1,000
Re-order period 2-4 months 1-3 months 4-6 months

Find:
1. Reorder Level
2. Min. Level
3. Max. Level
4. Average Level

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