Formula of inventory levels

Question

Write down the formula of the following inventory levels?

Answer 1

i) Re-order level
ii) Maximum level
iii) Minimum level
iv) Danger level

i) Re-order level = Maximum Lead Time x Minimum Lead Time

ii) Maximum level = Reorder Level + Reorder Quantity – (Minimum Usage x Minimum Lead Time)

iii) Minimum level = Reorder Level – (Normal Usage x Normal Lead Time)

iv) Danger level = Maximum Level x Lead time for Emergency purchases.