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Microlesson · 5-min read

Maximum Stock Level

## Maximum Stock Level

A company orders stock, consumes it, and re-orders before it runs out. The Maximum Stock is the highest inventory level reached at any point — typically just after a fresh order arrives, when consumption during the lead time was at its lowest.

### Formula

$$\text{Maximum Stock} = \text{Re-Order Qty} + \text{Re-Order Level} - (\text{Min Consumption} \times \text{Min Lead Time})$$

### Logic

  • We had stock = ROL when the order was placed.
  • During lead time, minimum consumption × minimum lead time is used up (worst case for over-stocking = least used).
  • Then re-order quantity arrives, pushing stock to its peak.

Worked example

### Example 1

ROL = 560; Re-Order Qty = 1,000; Min consumption = 40/day; Min lead = 3 days.

Max Stock = 1,000 + 560 − (40 × 3) = 1,000 + 560 − 120 = 1,440 units

⚠️ Common exam mistakes

  • Using max consumption × max lead time (gives minimum stock formula instead).
  • Forgetting to subtract the consumption-during-lead-time term — overestimates the peak.
Reference:
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