Question 4:

The following information pertains to raw material A used in production process of Part Pearl Inc., (10 Marks)

Normal usage 50 tons per week

Maximum usage 75 tons per week

Minimum usage 25 tons per week

Re-ordering Quantity30 unit

Re-order period (Lead Time) 4 to 6 weeks

You are required to calculate for Raw material A:

(a) Re-order Stock Level

(b) Minimum Stock Level

(c) Average stock level; and

(d) Maximum stock level