Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

Reader Interactions

Comments

  1. Question relating Labour
    Qn : budgeted production for the next period is 4800 units, each unit requires 5 labour hours to make. Labour is paid 10 per hour. Idle time represents 20% of total labor. What is the budgeted labour cost for the next period??

  3. I’ve got a question regarding Examples 5 and 6 (The Re-order levels).

    Lets say your EOQ requires you to place 12 orders a year. In this example, that would mean that your inventory is never above 400 units.

    But then what if your inventory asks you to re-order at 500 units.

    If we listen to our EOQ we will be in a situation where we’re going to be out of stock, but if we listen to our re-order level calculations, we’re spending extra unnecessary money on stock holding costs.

    So i guess my question is:

    1) which of these costs is more acceptable (Loss of sales vs increased stock holding cost)
    2) Does this matter in the exam?

    • Sorry, I was just reading this back and my example is bad – But I’m essentially asking what happens when there’s a conflict between the EOQ and the Re-order quantity.

      Is this likely to happen? and what do we do when there is a conflict?

      • They are two separate things, and there is no conflict.

        The EOQ is always calculated in the normal way. If we know exactly what the demand over the lead time is, then we will place a new order at that level. If the demand over the lead time is uncertain, then to be safe we will place a new order at the highest level of demand. As a result we will be carrying buffer/safety inventory all the time of the excess of the maximum demand over the average demand over the lead time. It won’t affect the EOQ itself.

  5. Hi there,

    First of all thank you for offering these lecture notes. I think parts c and d (here) need removing from the lectures listed for F9 as this is causing some confusion and looking at previous comments they are not examinable for F9 and not included in the F9 notes, Thanks

  6. Hi Mr. Moffat,

    There is a note written that online F2 MCQ TEST is to be attempted after learning chapter 6 in your note.
    Could you explain where I can find the test?
    Thank you for your lectures.

    Regards,
    Jeonghye Choi

  7. Hi Mr. Moffat,

    I’d like to commend you for your concise and clear explanations on Inventory Control. After listening your lectures I was able to answer the majority of questions in my BPP revision kit on this topic correctly.

    Regards,

    Kerron Duncan

      • Thank you so much for your sound lectures ..i really enjoyed it. My question is, why talking about the certainty of not running out of stock by calculation using maximum lead time and maximum demand when there is already buffer inventory? what is the essence of buffer then since this is a safety measures to ensure we do not run out of stock?

        Kind regards.

      • It depends on whether there is buffer inventory and the level of it.
        Carrying a buffer does reduce the chances of running out of inventory, but it does not automatically mean that we can never run out.

  8. hello sir, i wanted to make something clear. is these LIFO, FIFO and AVCO part of this chapter because it is there in the BPP book and therefore i was worried if it is part of the exams as well as the chapter and i have my exams coming Monday

  9. To calculate the holding cost of inventory over a year.

    Order quantity/2 is the average inventory throughout the year, ignoring any buffer inventory (which is what is usually the case in the exam). If there is buffer inventory, then the average inventory is higher by that amount throughout the year.

Leave a Reply