the storekeeper should initiate a purchase requisition when stock reaches

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The storekeeper should initiate a purchase requisition when stock reaches the Re-order level. The re-order level is the inventory level at which action should be taken to replenish stock to avoid disruption in production or operations. It is calculated considering factors like minimum stock level, average consumption, and lead time to receive fresh supplies.

Explanation of Re-order Level

  • It is a specific stock quantity that triggers the need for replenishment.
  • When stock falls to this level, a purchase requisition is initiated to procure fresh stock.
  • This ensures continuous availability of materials without overstocking or stockouts.

Additional Related Stock Levels

  • Minimum Level (Safety Stock): The minimum quantity below which stock should not fall to avoid production interruption.
  • Danger Level: The critical stock level below the minimum level, requiring urgent purchase action.
  • Maximum Level: The upper stock limit to prevent overstocking.

Typical Formula for Re-order Level

  • Re-order Level = Minimum Level + (Average consumption × Average lead time)
  • Or Re-order Level = Maximum consumption × Maximum reorder period

Thus, the storekeeper acts when stocks reach this re-order level to maintain smooth operations through timely procurement.