CA Inter P4 · Chapter 2 · Question 3 of 12
For a component, weekly usage is: maximum 900 units, normal 700 units, minimum 500 units. Lead time is: maximum 6 weeks, normal 4.5 weeks, minimum 3 weeks. The minimum stock level is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) 2,250 units
Explanation
Re-order level = maximum usage x maximum lead time = 900 x 6 = 5,400 units. Minimum stock level = re-order level - (normal usage x normal lead time) = 5,400 - (700 x 4.5) = 5,400 - 3,150 = 2,250 units.
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