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October 9, 2016 at 1:49 pm
Sir, why is the EOQ 2.005? Is it because its the lowest in terms of value?
John Moffat says
October 10, 2016 at 9:09 am
The EOQ is the order quantity for which the total inventory costs (order costs plus holding costs) per year are a minimum.
July 27, 2016 at 1:12 am
Total inventory cost in example 1a. Should it not include purchase cost?
July 27, 2016 at 7:14 am
The purchase cost is not an actual inventory cost – the same amount is payable over the year regardless of the amount of inventory held. It is only relevant in the case of quantity discounts which are explained later in the lectures.
June 21, 2016 at 3:01 pm
Thank you so very much
June 21, 2016 at 4:40 pm
You are welcome 🙂
June 12, 2016 at 4:14 pm
I’d just like to thank the lecturer for all these lectures. You simplify it, make it understandable. Keep up the good work I have my exam in a coupe of weeks for the F2. Anita
June 12, 2016 at 5:48 pm
Thank you for the comment, and I hope that the exam all goes well.
June 12, 2016 at 8:35 pm
You’re most welcome. Thank you so much.
June 19, 2016 at 2:51 pm
Nice stuff but i still think there are updates because page 72 actually was page 18 from the first example of my download.
June 19, 2016 at 3:10 pm
There may be the odd change of page number, but not because of updates (the syllabus has not changed for a long time). I don;t know why you are referring to page 72.
May 16, 2016 at 12:10 pm
Best lecture of innventory cntrol..you are ddoing a good job..God bless u…
May 16, 2016 at 9:32 pm
Thank you for the comment 🙁
December 11, 2015 at 1:14 am
HI why the total purchase price of ($25/unit * no of dseks) is not included in calculating the total cost of inventory?
December 11, 2015 at 6:53 am
Unless there are quantity discounts (which is discussed in the following lecture) then the total purchase price over the year is the same whatever the order quantity, so it is not relevant to the decision as to how many to order each time.
October 16, 2016 at 9:23 pm
I understand your principles but all the questions I’ve seen in the BPP revision kit relating to inventory cost kept multiplying the purchase price per unit by the annual demand when there are no discounts.
This is wrong, right? By your explanation, it’s more like an error of double counting.
October 17, 2016 at 7:41 am
It is not double counting! If there are no discounts then the total purchase cost over the year will be the same for any order quantity and unless the question specifies differently, it makes no difference to the EOQ whether you add in the purchase price or not.
November 15, 2015 at 4:15 pm
sir, how do we calculate re-order level??
November 15, 2015 at 4:30 pm
If you look at the revision notes, it is explained there.
April 6, 2016 at 10:23 am
Reorder level is calculated as max. usage * max. lead time
October 24, 2015 at 7:45 pm
hi. am sitting for my CPA(T) exams next week , i find these lectures to be very helpful.thank yu for the great job you are doing.
October 24, 2015 at 10:15 pm
Glad they are useful for you 🙂
October 15, 2015 at 9:50 am
May God’s peace and blessings be upone you, you are doing a great job helping people, I thank you for that. And the question I wanted to ask is that:
Aren’t we considering bulk discounts here?? If we buy 40,000 desks at the start of the year, our holding cost does get higher but what if the discount we are getting nullifies the higher holding cost.
October 15, 2015 at 10:34 am
In this introduction we are ignoring the possibility of bulk discounts. However they are dealt with later in the lectures on inventory.
September 8, 2015 at 7:16 am
Sir, Is there a question related to Just in time inventory in your lectures that I could practice. Kindly let me know the same.
September 8, 2015 at 7:52 am
No, because you will not be asked calculations relating to just-in-time. Any questions on it will be writing.
August 29, 2015 at 6:44 pm
John, I’m having a few questions.. But first I wanna say I’m enjoying my study here at open tuition… Well, I watched all the 6 videos on Inventory Control.. and was able to answer the unsolved questions of the course note myself.. but when I moved on to study Bpp I found a lot of new formula there, e.g how to calculate buffer/minimum inventory. I saw u replied here that there is no rule to calculate it, But Bpp states ‘Buffer inventory= Reorder level-(average usage multiplied by average lead time)’ I checked into ACCA webpage to access the syllabus. there I found the following: “”‘(iv) Identify, explain and calculate the costs of ordering and holding inventory (including buffer inventory)[s] “””
And also, the calculation of average inventory using the safety inventory and reorder quantity is nowhere discussed in all six videos.. So, would u please explain what to study and how? I’m getting all confused. I really wanna get above 80% at any cost and willing to study all day if that takes, so give me some suggestion on how to approach it, I will sit for my f2 exam on this december….Thanks..!!
August 29, 2015 at 7:06 pm
Our Lectures and Lecture Notes are what we teach on the ‘teaching’ phase of the course where our job is to make sure everyone will get more than 50% and therefore pass the exam. Obviously many get much higher marks, but our focus in on making sure people pass.
Certainly buffer/safety inventories and reorder levels are in the syllabus, but there are only ever very few (if any questions) on that – most of the inventory questions are on what we cover in the lectures.
However, we also have revision notes (which are again what we use on our courses where we have a few days of quick revision). In those notes you will find quick examples on what is in the main lecture notes and also things like buffer inventory and reorder levels.
Our Lecture Notes are not meant to replace Study Texts. However, if you work through all of our lectures notes with the lectures, if you work through the revision notes, and if you attempt our mock exam (and every time you attempt it you are likely to get different questions, because the computer chooses them at random from a large bank of questions), then you should pass easily. To be extra certain you should have a Revision Kit from one of the ACCA approved publishers because they contain lots of exam standard questions to practice on, and practice is the most vital thing of all.
August 29, 2015 at 7:21 pm
Thanx a lot! 🙂 I will get back to u soon whn i’ll be having another problem. U’re awesome! 🙂
August 25, 2015 at 3:14 am
John, I couldnt find the example which is shown here on the video on my note page 72, all the stuffs matched till chapter 4…please help..
August 25, 2015 at 9:28 am
The lecture is using the lecture notes for Chapter 5 of the lecture notes, which start on page 23.
Page 72 is on Process Costing which is later lectures.
August 25, 2015 at 1:17 pm
Got it, thanx 🙂
August 25, 2015 at 4:06 pm
July 28, 2015 at 9:22 pm
Hi John Just started work into this paper today in readiness for the Dec 15 sitting (in conjunction with F6 which I finished the OT course on at lunch today). Just want to say what a comfort it is to have you lecturing this. My stomach turned when I looked at the syllabus but seeing you appear on these lectures is a saving grace. I felt the same way on the F5 paper and with you support and BPP distance learning managed 89% on that paper. Based on this lecture alone it’s a real confidence booster to have a tutor make you “understand” rather than merely “learn”. Apologies for the hyperbole but I will sleep a lot easier tonight knowing you’re running the course – my wife will be much happier too as stress levels decrease considerably which in turn makes it easier for her to live with me for the next 5 months!
Thanks so much once again – I’m sure I speak on behalf of ALL students in our sincere gratitude for your time and effort. OT should be put forward for any and all awards for what you achieve and the time you give up without financial reward.
July 29, 2015 at 9:34 am
Thanks a lot for your comments 🙂
August 14, 2015 at 5:21 pm
What is mean by buffer inventory and howa we calculate it? plz tel me with general example Thank You
August 14, 2015 at 5:40 pm
Buffer inventory is not mentioned in this lecture, so please in future ask questions like this in the Ask the Tutor Forum and not as a comment on a lecture.
Buffer (or safety) inventory is when you hold extra inventory just to be safe – to avoid running out of inventory if (for example) a delivery is late arriving. You do not calculate it – there is no rule as to what is should be.
September 4, 2015 at 8:24 am
Chris, you are 100% right. I could not say it better, especially the family issue. Congrats for your F5 result. I am sitting it Dec 2015. Best regards to our tutor John and all fellow students.
September 4, 2015 at 9:09 am
Thank you Stanimir 🙂
June 24, 2015 at 9:58 pm
Ahhhh, I’m sry, wasn’t sure if this would be a comment or something to be posted at the Ask the Tutor. Alright then, noted.
May 20, 2015 at 11:56 am
Sir, Does the cost of the inventory itself (in this case $25/unit) not matter? The question is about calculating the cost of Inventory p.a (which I think includes the purchase price of the inventory)
Also if we used that, would it distort the EOQ?
May 20, 2015 at 5:34 pm
The cost of the inventory of $25 if not relevant because it would be the same total cost over the year however many we order each time. We are still ordering the same total number of units over the year, and so the total purchase price will be the same. We are costing out over the year and only the total order and total inventory costs will change with the number ordered each time.
The purchase price is only relevant if the holding cost per unit is a % of the purchase price (but only relevant for calculating the holding cost per unit), or if there are discount offered for purchasing larger quantities each time (which is dealt with in the later lectures.)
August 12, 2015 at 10:46 am
for inventory holding cost 250×25=6250x 10% = 625 is this ok
August 12, 2015 at 11:16 am
Of course – it is exactly the same as what I did (250 x (10% x 25))
How you get the figure is irrelevant provided obviously you end up with the correct final figure 🙂
May 11, 2015 at 9:39 am
this is very good thanks for the lecture.
February 27, 2015 at 11:08 am
Sir, Is there any kind of copyright problem or anything if i download these lectures so that i can see them later???
February 27, 2015 at 11:55 am
The lectures are copyright of OpenTuition, and they are not downloadable – they can only be watched online. It is the only way that we can keep this website free of charge.
December 7, 2014 at 6:19 am
These video today they r not playing???
December 7, 2014 at 8:34 am
The videos are working fine. Check on the support page for help – the link is above.
December 13, 2014 at 2:58 am
Sir, this lecture is not working. Message is come up file error. May you please do needful so I can listen this lecture. Thanks.
December 13, 2014 at 3:00 am
Error loading media: file could not be played.
December 13, 2014 at 9:36 am
The lecture is working fine – the problem must be at your end and you should go to the support page to get help. The link to the support page is above.
November 13, 2014 at 2:01 am
Thx for lectures,John. but I have a small question,I bought a latest text book published by BPP,and I planned to look though each chapter of the book after watching lectures ,but the contents of your lectures are quiet different from the book,which makes me confused %>_<%
November 13, 2014 at 8:28 am
The chapters may be in a different order, but the contents are not quite different! Our lectures go through most of what is needed for the exam. If you understand our lectures you do not really need to use the Study Text, but what you must have is a Revisiom Kit because it is vital to practice as many questions as possible.
November 13, 2014 at 12:44 pm
sorry I didn’t express myself properly, I do wanna say the order is different… But it’s good to know that I don’t have to go through the whole textbook coz it’s too much in the book! THX AGAIN!^_^
BELLO OLAIDE TITUS says
October 10, 2014 at 7:58 am
John pls, I really appreciate this inventory lecture but I think I need more lecture like this on d topic but this is d only one here, pls how can access more lectures on inventory?
October 10, 2014 at 4:10 pm
This is not the only lecture!
If you look at the list of lectures for F2, there are 6 lectures on Inventory Control – this is just the first one.
(In addition there are revision lectures)
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