Cost accounting-material cost

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Mansi srivastava

Mansi srivastava (Querist)
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07 May 2013 is NORMAL DELIVERY TIME and RE-ORDER PERIOD same concepts?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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09 May 2013 No. Normal delivery time is the time to which receive the materials after place the order but re order period is purely depend upon the requirement of the materials based on production

Mansi srivastava

Mansi srivastava (Querist)
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10 May 2013 sir but we do take lead time while calculating maximun level.....like if lead time is 6-8 weeks we place it at min re order period as 6......
eg:
max level=reorder level+reorder quantity-(min usage*min lead time or min reorder period)

max level=x+y-(Z*6)

sir in the above ques we take lead time as min order period.....why so???

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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11 May 2013 Basically Lead time means the time that lapses between placing an order and receiving that order. In your formula itself you have mentioned the minimum order period, not normal order period. minimum order period is the deadline requirement to receive the materials.when calculating the reorder time we cannot take directly the normal lead or delivery time.

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Mansi srivastava

Mansi srivastava (Querist)
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11 May 2013 ok thank you sir..

with kind regards
Mansi

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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22 June 2013 Are you talking for finished goods or raw material for both there is difference. The experts have correctly explained about the finished goods.

Mansi srivastava

Mansi srivastava (Querist)
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24 June 2013 yes sir i was talking about finished goods only....

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