FM Chapter 4 Questions – Management of working capital (2) – Inventory
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Thanks for the Questions they challenge you well enough esp after the lectures , however help clarify why we multiply by 4 instead of 3 on the solutions question 1.
Got it , if you order in a frequency of 3 months , you`ll need to order 4 times ayear hence the 4*3 to get the annual cost.
Yes, that is correct 🙂
Thank you for the assignments. they really helpful
If the cost of ordering each time is lower, then they will place more orders of fewer items each time.
If the order quantity each time is lower, then so too will the average inventory level be lower and this will mean that the holding cost over the year will be lower.
Understood
I agree. Do make sure you buy a Revision Kit from one of the ACCA Approved Publishers so that you have lots of questions to practice before you take the exam.
Thank-you for these EOQ questions – its not a hard concept but keeping it in the mind while thinking of all the other formulas is hard!