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Sir
Doesn’t the inventory cost comprise of addition of {purchase cost+Cost of ordering+Cost of holding}?
Although purchase cost is irrelevant since it’s constant but mustn’t it be added before plotting graph for a truer view
Or am I incorrect?The inventory cost itself does not include the purchase cost.
Unless there are quantity discounts, then as you say the purchase cost for the year is irrelevant to the decision because it is not affected by the order quantity. With or without the purchase cost included, the minimum cost non the graph will be for the same order quantity which is all we are interest in. You cannot be asked to plot graphs in the exam anyway 🙂
I hope that you are watching the lectures and not just using the notes. Using the notes on their own is pointless because they are only lecture notes. It is in the lectures that I work through the examples, and explain and expand on the notes.
If you are not watching the lectures then you need to buy a Study Text from one of the ACCA approved providers and study from there if you are to be confident of passing the exam.
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