Re-order level = (Max. Consumption × Max.

Re-order Period)
 Minimum Stock Level = Reorder level – (Normal Consumption x
Normal reorder period)
 Maximum Stock Level = Re-order level + Re-order Quantity –
(Mini. Consumption × Mini Re-order Period)
 Average Stock Level = 1/2 (Mini. Stock level + Max. Stock level).
Q1. Normal usage 200 units, Minimum Usage 100 units, Maximum
Usage 300 units, Reorder quantity 750 units, Reorder period= 2 to 3
months
1. Reorder level= (300 * 3) = 900 units
2. Minimum Stock Level = 900- (200 * 2.5) = 400 UNITS
3. MAXIMUM STOCK LEVEL= 900 + 750- (100 *2)= 1,450 units
4. Average stock level= ½ (400 + 1,450)= 925 units