A STUDY ON ORDERING LEVEL ON INVENTORY MANAGEMENT

Abstract

This study was undertaken to analyse the ordering level of Jentex Engineering. The data has been collected from the secondary sources and statements for the period of 2015-2019 (5years). Uses statistical process control charts to monitor system performance on an ongoing basis. This is the normally the point lying between maximum and minimum level. To calculate the reorder level, multiply the average daily usage rate by the lead time in inventory management. the reorder level formula is that inventory level at which an entity should issue a purchase order to replenish the amount on hand. The reorder level assume a constant rate of inventory usage, which is frequently not the case. Ordering level depends on a company’s work order lead time and its demand during that time and whether the company maintain a safety stock.