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Hi John, I’m stuck on this question and really need your help please.
Annual demand 4000 chairs
max inventory 75 chairs
min inventory 20 chairs
lead time 5 days
re-order quantity 100 chairsWhat is the average inventory level ?
Are you sure that you have typed out the entire question? (Because on the information you have given it is an impossible question 🙂 )
Does the book in which you have found this question not also give an answer to it?
A large store stocks chairs. The following info is available
Then it proceeds to give the info above.
I can see where they got their figures from, but if the maximum inventory is 75 chairs, then the average inventory cannot possibly be 70 chairs.
Where did you find the question, because it really is a stupid question 🙂
Morning John,
Thank you. I completely agree. I got the question from:
Kaplan F2 Exam Kit 1st Sept 2015 – 31 Aug 2016
Section A type questions Section 1
Syllabus Area B – Cost A/C Techniques Accounting for Materials
P27 Question 86 & Answer on P153Although it’s from the exam kit, I think I will give this question a miss and focus on the other areas of the chapter. I’m guessing that’s probably a wiser move. Who knows it could possibly be some sort of error on their part, either the publishers or the exam board.
I didn’t recognise the formula they used. It wasn’t in my text book and I haven’t come across a similar question before.
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