Stock control and its level, Cost Accounting

Assignment Help:

Stock control and its Level

Management must formulate decisions regarding to the control of stock levels along with a view to minimizing the cost of the company whereas achieving more efficiency in the material's availability to fulfill planned usage necessities. Consideration must be given to the specified control levels as:

a) Re order quantity and Notice the re-order quantity is not essential the EOQ

b) Minimum stock level

c) Re-order level

d) Maximum stock level

a) Minimum stock level

It is the level below that stock must not fall. It is really a base or buffer stock level. If stock reduces below such point, so there is a danger of stock out.

"Minimum stock level = Reorder level - (Normal consumption x normal reorder period)"

b) Maximum stock level

It is the upper limit above which stock must not be permitted to rise. All material to be maintained in store must contain a maximum level and stock should not be permitted to go beyond such level

"Maximum stock level = Re-order level +re-order Quantity - (Minimum consumption x minimum re-order period)"

c) Re-order level

Is a point which lies among maximum and minimum stock levels at that purchase orders should be placed to ensure such goods ordered are obtained before the minimum stock level is achieved? This is the level of stocks at that replenishment should be made to ignore a stock-out.

"Re-order level = maximum consumption X maximum re-order period"

d) Re-Order quantity

It is the quantity of stock ordered one time the re-order point is achieved. The quantity is like to minimize stock costs getting into consideration the cost of holding stocks and creating a order. It is regarded also like the Economic Order Quantity or EOQ.  It is computed like follows as:

EOQ = √(2DCO/Ch)

Whereas:  D is the annual demand as or knits

               Co is the cost of making one sequence

               Ch is the holding cost per unit per annum


Related Discussions:- Stock control and its level

Which of the four types of costs would include direct labor, Which of the f...

Which of the four types of costs would include Direct Labor? A. Unit-Level B. Batch-Level C. Product Sustaining D. None of the above

Subsidiary ledgers and control accounts, Example B & B Mechanical Repai...

Example B & B Mechanical Repairs is a small, family owned partnership that specialises in the servicing and repair of motor vehicles. The business employs three qualified mecha

Finance and logistics, responsibility of director of finance and logistics

responsibility of director of finance and logistics

Prepare a cash flow forecast, 1.  Prepare a cash flow forecast for the prop...

1.  Prepare a cash flow forecast for the proposal to launch SafeCus in 2010 for a three-year period from 1 January 2010 using the data in the body of the Case Study and discount at

What was the market rate of interest, Q. Given the below, partial bond accr...

Q. Given the below, partial bond accretion table, what was the market rate of interest when the bond was issued?     Cash     Interest

Interest earned on down payment, You sell a machine for $600,000. You allow...

You sell a machine for $600,000. You allow the client to pay 1/3 at the time of the sale and 1/3 at the end of year one and 1/3 at the end of year two. The company earns 10% on ass

the opportunity cost rate is 8 percent, Find the following values for a si...

Find the following values for a single cash flow: a. The future value of $500 invested at 8 percent for 1  year b. The future value of $500 invested at 8 percent for 5 years

Behavioural aspects of standards, Behavioural Aspects of Standards Bud...

Behavioural Aspects of Standards Budgets and Standards rely heavily on the people who have to work to meet them. Since the detailed nature of standard costing and its involvem

Overhead absorption, Overhead Absorption Absorption of overheads refer...

Overhead Absorption Absorption of overheads refers to the sharing out of overhead costs to the some cost centers such used the overheads. This is utilized when the overheads c

Why communities begin using fca, Q. Why communities begin using FCA? Th...

Q. Why communities begin using FCA? There are several reasons why communities start by means of FCA. For instance: • To elucidate more evidently MSW costs to people. • It is

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd