Maximum stock level formula is:
ARe-order level + max consumption × max lead time
BRe-order level + EOQ
CRe-order level − EOQ
DRe-order level + EOQ − minimum consumption × minimum lead time
Answer & Solution
Correct answer: D. Re-order level + EOQ − minimum consumption × minimum lead time
1. Maximum stock level represents the upper bound of stock the firm chooses to hold.
2. Standard formula: Re-order level + Re-order quantity − (min consumption × min lead time).
3. The deduction reflects the minimum that would be consumed during the shortest lead time.
4. Hence the correct expression matches the first option exactly.
_Source: ICAI BoS Inter Paper 3, Ch 2 "Material Cost", §2.4.5 ¶5_
Related questions
Annual usage 5,000 units; ordering cost ₹40; carrying cost 20 percent of price ₹20. OptimaEOQ when discount is offered changes when:Abnormal loss in material processing is:Stores ledger records material movements in:VED analysis classifies stores items based on:Carrying cost ₹6/unit, ordering cost ₹120/order, annual demand 18,000 units. EOQ equals:Weighted average price after receipts of 100 units at ₹10 and 200 units at ₹13 is:Under LIFO, opening stock 100 units at ₹20, purchase 200 at ₹25, issue 250 units. Value of