Optimum safety stock level

Can you share the question?

CA Suraj Lakhotia

Admin

18-Nov-19 19:55

What you're referring to is maybe tge concept of stock out risk

Tirath Shah

CA Inter

★ 1K+

29-Nov-19 22:46

Stock out cost multiplying with probability of stock out it becomes expected stock out cost

Dhrumil Dhobi

CA Inter

★ 90

02-Dec-19 15:01

For eg:- if you are maintaining 50 units of stock level... Some customers came for 100 units and it's probability is only 2%. That means 2% customers may ask for 100 units . If suppose stock out cost is 150 per unit . Then stock out cost is 50 Ã? 150 = 7500 But expectation to happen such a situation is only 2% . Then expected stock out cost is 7500 Ã? 2% =750. (So remember about provisions....We are providing expected losses as per prudence )

george joseph

CA Final

★ 5K+

16-Feb-20 04:21

Expected means, probability of happening. And that type of question is quite important in material topic which we solve by ad hoc basis

Star Ca

CA Inter

★ 3K+

24-Feb-20 16:16

So, we check expected stock out cost =stock out costÃ?probability of happening such stock out (i. e,) probability which you find by using ad hoc basis. #in majority of this type of questions they try to ask optimum stock level Which is equal to, minimum of summation of(expected stock out cost +amount required to carry that safety stock,,(which is commonly called as holding /carrying/storage cost)

Star Ca

CA Inter

★ 3K+

24-Feb-20 16:22