05.06-Section B
Question 3
This question, worth eight marks, involved stock control and the economic order quantity. It was the best answered question on the paper. Many candidates correctly calculated the economic order quantity in part (a). Errors from weaker candidates were:
substituting the values incorrectly into the formula given giving the answer as a value instead of units failing to give the answer to the nearest unit, as required.
Part (b) required the straightforward calculation of a re-order level, where usage and lead time were constant. Surprisingly, this part was not attempted by a large number of candidates and most of the answers were very poor. For example, many candidates produced a re-order level of 183,960 units (8,760 x 21) in a situation where annual usage was only 8,760 units. Answers suggested that candidates had rote-learned the subject and were unable to adapt that learning to the specific circumstances in the question.
Part (c) required explanations of the terms 'stockout' and 'buffer stock', and a description of the circumstances in which the company in the question should consider having a buffer stock. The explanations of the terms were generally quite good. The application to the company was less well-answered, or not even attempted in many cases.
