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April 8, 2020 at 10:05 pm
Hello John, When adding the “cost of the buffer inventory”, do we add the cost of the entire buffer or must we obtain an average as well?
John Moffat says
April 9, 2020 at 7:32 am
We add the whole of the buffer because that is the extra amount held throughout the year.
November 1, 2019 at 7:43 am
In this lecture, you said that if given buffer/safety inventory then it must be added to the average inventory when calculating the holding stock which is correct. But sir, in a situation where we are not provided with the unit of buffer, how then do we calculate it. Thanks
November 1, 2019 at 9:08 am
The question will tell you if there is buffer inventory
November 1, 2019 at 7:39 am
I always love watching your lectures. Thanks for the information.
November 1, 2019 at 9:06 am
Thank you for your comment 🙂
September 20, 2019 at 9:59 am
I dont why how could I understand this without your videos. you are the best Thanks a lot
September 6, 2019 at 1:53 pm
Why we decrease holding cost by 10% only in 5000 units and not in 10000 units example? Should holding cost not be 10% of 25 regardless of the discount applied?
September 6, 2019 at 1:51 pm
Thank you for this lecture. Can I ask why when calculating holding cost for 1000 units we do not decrease the price by 10 % but when we calculate holding cost we do? Is that not the case that in all circumstances holding cost should be 10% of 25?
September 6, 2019 at 3:50 pm
We don’t decrease the price by 10%. The holding cost is always 10% of the purchases price. However if you read the question in the free lecture notes you will see that if we order more than 5,000 each time then the purchase price falls by 1% and therefore the holding cost is lower by 1%. Similarly if we order more than 10,000 each time then purchase price falls by 1.5% and therefore the holding cost is lower by 1.5%.
I don’t know where you are getting 1,000 units from.
July 12, 2019 at 4:17 pm
Hii john, As i have solved the discount questions from the kaplan book, it is totally different ….they haven’t taken the discount on the holding cost as we took …..they are directly taking the holding cost without discounted amt
July 12, 2019 at 4:50 pm
I cannot comment on what Kaplan has done. What I have done is correct (assuming, of course, that the holding cost is given as a % of the purchase price and not as simply a fixed amount per unit).
Samuel Koroma says
July 8, 2019 at 12:22 pm
The most important thing I learnt is that of a change in policy and taking advantage of settlement discount. Under the change of policy the business should consider both the current and new position for receivables and payables and ascertain any fall or increase to determine the net cost/benefit of the change.
July 8, 2019 at 12:31 pm
Note that this comment relates to receivables and payables management and not inventory as was previously thought
January 19, 2019 at 4:46 pm
In real life it is likely that a company will be committed to a warehouse already so will have a certain capacity. Therefore EOQ would be irrelevant as purchasing decisions would be based on whether or not there was enough space. Am I correct to think this way?
I can only think EOQ would be useful if additional storage capacity was being considered or if choosing between different products (seeing what levels of each would be more cost efficient for the space available).
Be grateful for your thoughts
January 20, 2019 at 10:02 am
A company would consider taking on more storage space if it meant that their costs overall would be lower.
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