MATS Formulae Flashcards
Minimum inventory level (or inventory buffer level)
Reorder level - (Average usage x Average lead time)
Maximum inventory level
Inventory buffer level + Maximum order quantity
Reorder level
(Average usage x Average lead time) + Inventory buffer
Minimum reorder quantity
Average usage x Average lead time
Maximum reorder quantity
Maximum inventory level - Inventory buffer level
Maximum reorder quantity
Maximum inventory level - Inventory buffer level
Total inventory costs
Ordering costs + Purchase costs + Holding costs
EOQ Formula
Q = EOQ= **square root* 2CoD / Ch
D = annual demand in units
Co = fixed cost per order
Ch = cost of holding one unit for one year
Q = number of units ordered
Average price per unit
(Total value of opening inventory + Total value of units added to inventory)
/
( Units of opening inventory + Units added to inventory)
Formula to apportion costs
Value of apportionment based of cost centre / Total value of apportionment base
x
Total overhead cost
Overhead absorption rate (OAR)
Production overhead / Activity level
Overhead absorption rate (OAR) for year in advance
Total budgeted production level / Total budgeted activity level
Amount absorbed
Actual production activity x OAR
