COST ACCOUNTING
INVENTORY AND PRODUCTION MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The number of unit order each time
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The number of unit order in maximum quantity
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Detailed explanation-1: -Reorder Quantity = ADU x ALT. Once you multiply ADU and ALT, you’ll know the amount of inventory you need to reorder. Let’s look at an example of how to calculate reorder quantity for an individual product: ADU = 10 units.
Detailed explanation-2: -It is also known as reorder point. The reorder quantity is the quantity of the order that is to be placed on a new purchase order for the particular item.
Detailed explanation-3: -Reorder point = total lead time demand + safety stock You’ll need to understand how to calculate your lead time demand and safety stock before using ROP, which, thankfully, is also fairly simple.
Detailed explanation-4: -Re-Order Level implies the level at which new order should be placed for the purpose of restoration of stock. Re-Order Quantity implies the size of the lot for which the order is placed when the stock of material falls to reorder level. When to buy or place an order for materials.