Managerial Accounting Interview Questions and Answers

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Question - How Do You Calculate The Following Inventory Levels?

Answer -

Re-order level = Maximum Lead Time x Minimum Lead Time
Maximum level = Reorder Level + Reorder Quantity – (Minimum Usage x Minimum Lead Time)
Minimum level = Reorder Level – (Normal Usage x Normal Lead Time)
Danger level = Maximum Level x Lead time for Emergency purchases

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