Reorder level and Maximum level of stock

Reorder level and maximum level of stock are two different concept .The reorder level is the level where you place an order for the stock whereas the maximum level the maximum holding of the stock efficiently and any quantity above that level would cause inefficiency. The stock involve huge cost therefore it is necessary to determine the maximum efficient level.

There is a scientific formula to calculate the minimum level which is given below


Maximum Level = Re order level ( Minimum Usage * Minimum Lead time) + Reorder Quantity