Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed



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Students maybe familiar with EOQ, safety stock and recorder points from finance courses. However, in those courses, the costs were assumed. Accountants help (1) to decide what costs should be included in these calculations as relevant costs and (2) to estimate the amounts of these costs. Particularly for low-value items, companies often use simple signals such as painted lines on a bin to prompt a reorder. The intuition behind the reorder point is that there is a need to reorder when the amount of stock on hand just equals that which is needed to cover sales that will occur during the purchase-order lead time.


Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012

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