ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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ROL-(NORMAL CONSUMPTION *NORMAL DELIVERY TIME)
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ROL-(normal +(consumption*normal delivery time)
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(ROL+ normal consumption)* normal delivery time
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ROL+ normal consumption/normal delivery time
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Detailed explanation-1: -The Average stock level is calculated such as: Average Stock Level = Minimum stock Level + 1/2 of Reorder Quantity. (vi) Normal reorder period = 10 days. Maximum Stock Level = Reordering Level + Reorder Quantity – (Minimum Consumption x Reorder period) = 3, 000 + 1, 600 – (120 X 10) = 3, 000 + 1, 600 – 1, 200 = 2, 400 units.
Detailed explanation-2: -Re-Order Level = Safety Stock + (Average Consumption per day × Average Lead Time)
Detailed explanation-3: -The Minimum Stock (Safety Stock) requirement specifies the lowest quantity of a certain product in a warehouse, and is added to the total replenishment recommendation. This value is set independently by location/warehouse. Replenishment recommendations are calculated to cover your Lead Time and Days of Stock.