How do you find maximum inventory EOQ?

How do you find maximum inventory EOQ?

Solution

1. Maximum Level of Stock = Reorder level + Reorder quantity – (Minimum usage × Minimum lead time) = Reorder quantity – (Minimum usage × Minimum lead time)
2. *Reorder level = (Maximum usage × Maximum lead time) + Safety stock.
3. = *3,350 sq.
4. *Reorder level = (Maximum usage × Maximum lead time) + Safety stock.

How do you calculate inventory level?

It is calculated by dividing sales by beginning inventory. This metric, like stock-to-sales ratio, looks at sales in relation to inventory for one period of time as opposed to a longer time period. However, it is useful for understanding performance as well as possible inventory needs.

How do you calculate minimum inventory?

Formula to determine the minimum stock level The minimum stock level can be determined by applying the following formula: Minimum Stock Level = Re-order Level – (Normal consumption per day/per week, etc. X Normal delivery time).

What is the inventory formula?

The full formula is: Beginning inventory + Purchases – Ending inventory = Cost of goods sold. The inventory change figure can be substituted into this formula, so that the replacement formula is: Purchases + Inventory decrease – Inventory increase = Cost of goods sold.

What is minimum level of inventory?

Definition and Explanation of Minimum Stock Level A minimum stock level is the level of an item of material, below which the actual stock should not normally be allowed to fall. In other words, it refers to the minimum quantity of a particular item of material that must be kept in the stores at all times.

How do you calculate inventory cost per unit?

Using the Average Cost Method, Dollars of Goods Available for Sale is divided by Units of Goods Available for Sale to determine a cost per unit. In the above example, average cost = \$6,000/480 = \$12.50 per unit.