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Re-order level Kap text TYU9

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Re-order level Kap text TYU9

  • This topic has 5 replies, 2 voices, and was last updated 3 months ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • June 19, 2023 at 4:27 pm #687242
    youshaali
    Participant
    • Topics: 48
    • Replies: 84
    • ☆☆

    Use of a re-order level builds in a measure of
    safety inventory and minimises the risk of the
    organisation running out of inventory. (TRUE)

    Hello tutor!!
    My question is why this statement is true ?
    Because In my point of view, Buffer inventory minimises the risk of stock out and also what this statement means “Use of a re-order level builds in a measure of
    safety inventory”

    Thank you

    June 20, 2023 at 8:13 am #687268
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 53169
    • ☆☆☆☆☆

    Having a reorder level means that you are placing a new order before you run out of inventory. That is automatically meaning that you have a buffer (or safety stock) to cover against a delay in receiving the new order.

    Have you watched my free lectures on this? The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.

    June 21, 2023 at 9:40 pm #687311
    youshaali
    Participant
    • Topics: 48
    • Replies: 84
    • ☆☆

    Then sir my question is could they give any question in which safety stock has been already given and they ask to calculate re-order level ?

    June 22, 2023 at 8:41 am #687321
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 53169
    • ☆☆☆☆☆

    Yes they could.

    June 22, 2023 at 8:22 pm #687339
    youshaali
    Participant
    • Topics: 48
    • Replies: 84
    • ☆☆

    Thank you sir

    June 23, 2023 at 9:12 am #687345
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 53169
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
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