Materials, costs, ordering ect

Question 1

raw materials used to produce goods as well as the goods that are available for sale are also known as ?

Answer 1

Materials inventory

Question 2

Materials inventory

What are the three materials held by a manufacturing business ?

Answer 2

1. Raw materials
2. Work in progress
3. Finished Goods

Question 3

Materials inventory

What are the materials held by a trading business ?

Answer 3

Goods for resale

Question 4

Materials inventory

What are the materials held by a service business ?

Answer 4

Consumable items

Question 5

To work out the buffer inventory an equation uses the reorder level, average usage & the average lead time. What is the equation used ?

Answer 5

reorder level - (average usage x average lead time)

Question 6

To work out the reorder level the equation uses the average usage, average lead time & buffer inventory. What is the equation used ?

Answer 6

(average usage x average lead time) + buffer inventory

Question 7

To work out the maximum inventory level the equation uses the buffer inventory & the maximum reorder quantity. What is the equation used ?

Answer 7

buffer inventory + maximum reorder quantity

Question 8

To work out the maximum reorder quantity the equation uses the maximum inventory level & the buffer inventory. What is the equation used ?

Answer 8

maximum inventory level - buffer inventory

Question 9

To work out the minimum reorder quantity the equation uses the average lead time & the average usage. What is the equation used ?

Answer 9

average usage x average lead time

Question 10

What are the two ways that a business can value their inventory held ?

Answer 10

• Buying price
• Net selling price