Setting of Various Stock Levels

Determination of various levels of  inventory is one of the prime responsibility of Materials Department. The purpose behind setting of different stock levels is to ensure smooth operation of the enterprise and allocation of appropriate amount of monetary resources to different items in the inventory. A number of factors affect the determination of  stock levels for different items. Some of these are: Rate of consumption Lead time Storage /warehousing /carrying costs Insurance cost Seasonal considerations Price fluctuations Economic Order Quantity (EOQ) Quality of raw material Availability of space Availability of funds…