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Could anyone please explain this to me?

Forums › ACCA Forums › ACCA MA Management Accounting Forums › Could anyone please explain this to me?

  • This topic has 2 replies, 3 voices, and was last updated 9 years ago by Jegan.
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  • September 29, 2015 at 10:25 am #274088
    felixx3
    Member
    • Topics: 8
    • Replies: 4
    • ☆

    What is buffer stock? I do not get the meaning of this due my lecturer’s poor explanation.

    September 30, 2015 at 7:41 pm #274346
    mrjonbain
    Moderator
    • Topics: 6
    • Replies: 2423
    • ☆☆☆☆☆

    This could vary slightly depending on context but the basic idea in terms of inventory control is that the buffer provides an additional level of safety in terms of avoiding running out of inventory.If for example demand during a period is higher than expected and/or if the lead time between making an order for inventory and delivery time is longer than expected.

    November 3, 2015 at 4:07 pm #280347
    Jegan
    Participant
    • Topics: 17
    • Replies: 38
    • ☆☆

    Buffer stock is the minimum inventory level.

    Minimum inventory level = re-order level – (average demand x average lead time)

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