Stock control and its level, Cost Accounting

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

Posted Date: 2/5/2013 5:03:28 AM | Location : United States







Related Discussions:- Stock control and its level, Assignment Help, Ask Question on Stock control and its level, Get Answer, Expert's Help, Stock control and its level Discussions

Write discussion on Stock control and its level
Your posts are moderated
Related Questions
A provision must be made in advance for those debts whose recovery is uncertain and to writing off bad debts. Each enterprise, depends on their past experience, make a provision fo

Tyler's Consulting Company has purchased a new $15,000 copier. This overhead cost will be shared by the purchasing, accounting, and information technology departments since those a

Question Roseville, Ltd., sells one of its products for $500 each. Sales volume averages 1,000 units per year. Recently, its main competitor priced their competing product at 1

what is traditional costing system

Relevant Costs and Decision-Making The relevance of costs will depend upon the purpose for that they are being utilized. Relevance is related to future decisions. The relevanc

Q. What is the amount of compensation expense recognized for stock options for each year of the vesting period, given the following information?  A firm awards stock options at-

maintenance costs at a hospital

The following information has been prepared for XYZ Ltd by their assistant accountant. The risk free rate of interest on government securities in 2008 is 7.3% Required:

What will be the cost of Well Water after considering the financing surrounding the purchase (savings on the loan), Well Water's (net) working capital situation, and the additional

The sale turnover and profit during two period were as following Period 1=Sales Rs.20 Laks, and Profit Rs.2 Laks Period 2=Sales Rs.30 Laks, and Profit Rs.4.Laks Calculate P/V Ratio