Module 6 - Working Capital Management Flashcards
1
Q
Stock turnover
A
CoS/stock
2
Q
Stock days
A
(Stock/CoS) x 365
3
Q
Economic order quantity
A
sqrt (2CoD/Ch)
4
Q
Limitations to EOQ model
A
- assumes materials are used at a constant rate
- limited use in dealing with materials whose use cannot be predicted
- has limited use in dealing with materials whose prices fluctuate radically
- depends upon historical data
5
Q
Reorder level
A
lead time (days) x units used per day
or if uncertain
max usage x max lead time
6
Q
Average stock level
A
Safety stock + (order quantity/2)
7
Q
Safety stock level
A
re-order level - (average usage x average lead time)
8
Q
Max stock level
A
re-order level - (min usage x min lead time) + reorder quantity
9
Q
Total stock cost
A
Purchasing costs + ordering costs + holding costs
