The triple bottom line is a sustainability framework that examines a company’s social, environment,

and economic impact (or People, Planet, Profit). ASI Ltd practice would reduce the waste into the

environment as well as keep the business more profitable. So the correct answer should be Planet

and Profit.

Reference:

- 25 Years Ago I Coined the Phrase “Triple Bottom Line.” Here’s Why It’s Time to Rethink It.

- CIPS study guide page 202

LO 3, AC 3.3

Direct and indirect costs of holding inventory include the following:

1. Acquisition costs

2. Holding costs (carrying costs) are the costs associated with the storage and handling of physical

stock. There are two different types of holding costs:

a. Costs related to the value of the goods: financial costs (i.e. the interest on the working capital tied

up in inventory, which may be the bank borrowing rate or the company's target for return on capital);

cost of insurance; losses due to product deterioration; losses due to obsolescence and redundancy of

inventory; losses due to theft, accidental damage etc.

b. Costs related to the physical characteristics of the inventory include the following: storage space;

power, heat and lighting of the store; movement equipment; labour costs; administration costs.

3. Costs of stockouts

Reference: CIPS study guide page 100-101

LO 2, AC 2.2

Reorder point is the point either in time or in a process when the next order should be placed.

Reference: CIPS study guide page 113

LO 2, AC 2.3

Direct and indirect costs of holding inventory include the following:

- Acquisition costs: preparing the requisition, supplier selection and approvals, time and costs of the

procurement process, etc.

- Holding costs

- Costs of stockouts

LO 2, AC 2.2

The triple bottom line is a sustainability framework that examines a company’s social, environment,

and economic impact (or People, Planet, Profit).

Reference:

- 25 Years Ago I Coined the Phrase “Triple Bottom Line.” Here’s Why It’s Time to Rethink It.

- CIPS study guide page 202

LO 3, AC 3.3

Possible solutions to the high irregular or seasonal demand problems are listed below:

• Take advantage of the height of the warehouse

- Mezzanine floor

- High racking system (increase storage capacity but require high-reach material handling equip-

ment)

• Eliminate dead stock or inventory

• Improve material flow

• Improve storage location method

• Consider using aisle space during demand peak

• Narrow aisles between racks (require narrow handling equipment)

• Carousel-type storage system

• Auto-storage and retrievals system (ASRS)

Reference: CIPS study guide page 22

LO 1, AC 1.1

Dependent demand is the requirement for stock item which is directly related to and therefore de-

pendent upon the rate of production (examples are: raw materials, components, energy)

Independent demand is the requirement for stock item which is not directly related to, and is

therefore independent of rate of production. Although independent demand is called thus, it can still

be influenced by economic factors external to the demand-supply model such as general consumer

sentiment and consumers' available disposal income. However, businesses that need to predict the

number of products with independent demand needed to sate their customers have it easier than

businesses that must calculate the demand for products with dependent demand because there are

fewer factors to consider.

In this scenario, the new drug is finished good which is dependent on the demand of the market, and

the firm needs to forecast before initiating the production process. The item is independent from

rate of production, therefore, it must be independent demand item.

Reference: CIPS study guide page 95-98

LO 2, AC 2.1

Fixed-Time Period System (or Periodic Review system) is the inventory management system in which

inventory is checked in fixed time periods, T, and the quantity ordered varies.

The imprest system is a form of financial accounting system. The most common imprest system is the

petty cash system. The base characteristic of an imprest system is that a fixed amount is re-served,

which after a certain period of time or when circumstances require, because money was spent, it will

be replenished.

So the correct answer should be "Items are reviewed as part of an imprest system"

LO 2, AC 2.3

In management accounting, reorder level (or reorder point) is the inventory level at which a com-

pany would place a new order or start a new manufacturing run.

Reorder level depends on a company’s work-order lead time and its demand during that time and

whether the company maintain a safety stock.

If a company maintains a safety stock, reorder level calculation changes are follows:

Reorder Level = Average Demand × Lead Time + Safety Stock

Reference: CIPS study guide page 112-114

LO 2, AC 2.3

Dependent demand items rely on the internal production requirements of an organization. These

items:

Depend on user department production levels: Demand is driven by the needs of the production

line.

Can be managed using JIT systems: Just-in-Time inventory helps optimize stock levels based on

immediate production needs, reducing holding costs and minimizing waste.

Dependent demand items differ from independent demand items, where demand is customer-

driven rather than production-driven, emphasizing demand predictability and timely procurement.