Inventory Control (part 3) – Economic Batch Quantity – ACCA Management Accounting (MA)

Comments

1. hoangacca says

   November 1, 2025 at 1:39 am

   Hi Mr. Moffat,

   I would like to discover the rationale behind 1 – (D/R), what if D = R? Because when Demand p.a = Rate of production p.a, denominator is equal to 0, then whole fraction has no meaning?

   Thanks,

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   • John Moffat says

     November 2, 2025 at 2:04 pm

     I explain the rationale in the lecture.

     If the rate of demand is equal to the rate of production then think about it – the production would all be immediately going to satisfy the demand so there would be no inventory being held and there would be no order quantity.

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2. John Moffat says

   October 8, 2025 at 5:45 pm

   The denominator in the formula is 3(1 – 50,000/500,000) = 3 (1 – 0.1) =3 x 0.9 = 2.7

   The numerator is 2 x 200 x 50,000 = 20,000,000

   20,000,000 / 2.7 = 7407407

   The square root of 7407407 = 2722

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3. Markie says

   October 8, 2025 at 12:37 pm

   I can’t lie, I was following until we got to this whole 0.9 thing, every time i input the formula i get a number closer to 2449,

   the forumla clearly states 3 X 0.9 or 3 x 1 – 50000/500000 and when you input that you get 2449 however you have wrote X yet said divide whilst putting in the calulator without explaining if thats correct so i now dont know if your wrong the formulas wrong or what

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   • muzi569 says

     December 20, 2025 at 12:30 pm

     I think the EBQ as follows:
     EBQ=SQRT??2*200*50000?/(3*0.9))=2721.66~2722 Units.

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