1. Profile photo of waseem says

    Hey John,
    I couldn’t understand why holding cost will decrease with decrease in ordering cost. I mean when we will place fewer order then we’ll hold more inventory so holding cost will increase. Thanks

    • Profile photo of John Moffat says

      If there is a decrease in the ordering cost, they will place more orders (not fewer orders).

      The EOQ will be smaller, therefore the average inventory will be smaller and so the holding cost per year will decrease.

      If you are not convinced then try it yourself with one of the examples in the notes. Calculate the EOQ. Then do the same question with a smaller order cost and see what happens :-)

      • Profile photo of shahz20 says

        My bad! Never realised you had a picture on the website. I only know Mr Miike Little and Tax Tutors face. Nonetheless you all are amazing teachers , doing the greatest job. All my acca exams so far have been accomplished thanks to open tuition

  2. Profile photo of Raj Singh says

    I wish I could sit in one of your lectures. I loved the last bit of this lecture about how people write notes to the examiner, these lectures are not only informative but you do provide some humour too! Thank you Mr Moffat

  3. avatar says

    Dear Mr. John Moffat,

    can you please show me the way to do question 4? I got 300 units and there’s no option in the question for that.

    EOQ = 2x160x9000 / 32 = 90,000 square root = 300 units.

    pls advise..

    thank you

  4. avatar says

    For Question No. 3 why the demand is divided into monthly? Does this mean if the question is asking optimal reorder quantity we will present the monthly demand? Just confused though . Thanks

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