Danger Level of Materials or Inventory Stock
Danger Level of Materials or Inventory Stock:Definition and Explanation:Some enterprise also calculate danger level. When this level of stock is reached, then emergency steps are taken by the management to acquire material supplies. When danger level is reached, the try is made to purchase materials from the nearest possible source or place so that the workers and plant and machinery may not remain idle due to shortage of materials supplies. Formula:Danger level can be calculated by the help of the following formula or equation: Danger level = Average daily requirement × Time required to get emergency supply Example:
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Other Related Accounting Articles:
- Re-order Level or Ordering Point or Ordering Level
- Minimum Limit or Minimum Level of Stock
- Maximum Level or Maximum Limit of Stock
- Materials and Inventory Cost Control
- Stock Control
- Requirements of a System of Materials Control
- Reorder Level
- Materials Ledger Card–Perpetual Inventory
- Inventory Turnover Ratio or Stock Turnover Ratio (ITR)
- Indirect Materials
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