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Question 5.13 – Accounting for material from BPP practice book
Can you pls explain the answer of this question
The DEMAND is ” annual demand ” and CH is annual holding cost
I m confusing why they take 5400 /12 month = 450 per month and 0.10$ is just a value of 1 month , why don’t we take 0.10 x 12 months ?
Thank you
By all means use the annual demand of 5,400 and the annual holding cost of 0.10 x 12.
I assume that you had done this yourself before looking at the answer, and you will therefore have seen that you end up with exactly the same answer 🙂
Although best is always to use annual demand and annual holding cost, it doesn’t make any difference if instead you use monthly demand and monthly holding cost.
Mr John .
( Question 5.14 from BPP practice book)
Why average of inventory = safety inventory + reorder quantity /2 ?
Besides , I cant find chapter ‘forecasting”
Thank you
If there were no safety/buffer inventory, then the average inventory is the
reorder quantity / 2, as explained in my lectures.If there is also buffer/safety inventory, then the average inventory is higher by the amount of the safety inventory throughout the year.
If you are looking for forecasting in our free lecture notes, then it is covered in chapters 19, 20 and 21 – the notes and lectures cover everything needed to be able to pass the exam well (although it is of course completely pointless to use the notes without watching the lectures that go with them, because they are lecture notes – not a study text).
Mr John
Can you pls help me question 5.22 from PBB practice book ?Im not sure if there is misprint here. But how can we know which one is sale and which one is purchase ?
I have checked in the answer . They take 2 Jan , 21 Jan and 29 Jan as the sales . And 12 Jan is purchase. How can we know it ?
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