Explain in simplest way

7 ' Establishing Quantity Standard e Reorder point is calculated in the following manner. If normal usage is 14 cans per week and it takes five days from date of order to get delivery, then the basic number of cans needed is 10. However, because delivery may be delayed, because usage may increase for unforeseen reasons, or because both of those possibilities may occur at once, it is advisable to increase that amount somewhat. e The amount of the increase is a matter for management to decide. For our purposes, we will use 50 percent for all calculations. If that were so in this case, the reorder point would be set at 15 cans. Under the periodic method, the DEI would similarly be calculated as 15 cans. Par stock 20 -Reorder point 15. =Subtotal 5. Oo +Normal usage until delivery 1 =Reorder quantity Establishing standard for Price The availability of sources of supply varies considerably from one location to another. It depends on ownership policy, availability of supplies and general market condition, supplies can be choose from: e Wholesalers Local producers Manufactures e Packers e Local farms e Retailers e Cooperative association Perishable because prices for perishable often fluctuate daily it is necessary to find the price from different supplier through telephones. Non-Perishable normally with fewer suppliers with lowest price and consistent quality, small quantity delivery wise