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E0Q

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › E0Q

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by AvatarJohn Moffat.
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  • December 7, 2020 at 9:52 pm #598214
    Avatarapplessauce
    Member
    • Topics: 85
    • Replies: 65
    • ☆☆

    Sir I have a doubt for a certain scenario I just thought of

    In the case that there is minimum inventory given(buffer inventory) and EOQ is given and we need to calculate the Ordering costs
    Note that the they also give the figures for annual demand

    So if i as to find the Ordering costs I should divide only the demand by EOQ and not include minimum inventory right?

    Please correct me if I am wrong sir

    December 8, 2020 at 8:57 am #598326
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54838
    • ☆☆☆☆☆

    You are correct. The number of orders is the annual demand divided by the order quantity each time, and any buffer inventory is irrelevant for calculating the number of orders.

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