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
Q. Is there barely one way to conduct fca? Ans. No. It is significant for each area to put the FCA process in perception with its waste management goals. Every community w

Build-Rite construction has received favorable publicity from guest appearances on a public TV home improvement program. Public TV programming decisions seem to be unpredictable, s

Kaplan Computers manufactures high end computer systems for the graphics design industry. At the present time, the company makes three computers with the following characteristics

Beaver Company (a multi-product firm) produces 5,000 units of Product X each year. Each unit of Product X sells for $8 and has a contribution margin of $5. If Product X is disconti

Break-Even Calculations As they say, a picture is significance a thousand words, and this is undoubtedly true for the CVP graphic just presented. Though, everyone is not an art

MARGINAL COSTING As per the Chartered Institute of Management Accountants, London, the phrase 'Marginal cost' means - 'the amount at every given volume of output through which

A company is to produce an IC and a chip size of 120mm2 has been estimated, based on using a full-custom nMOS technology on 8" wafers. The process has a 92% yield at the wafer fab

Clopack Company manufactures one product that goes through one processing department called Mixing. All raw materials are introduced at the start of work in the Mixing Department.

what is overhead cost classfication of cost overhead

How does idel capacity effect cost behavior patterns and factory overhead application methods