Business Studies Q1b – Inventory management | HSC HSC Practice – StudyPulse
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Business Studies HSC HSC Practice Question 1b – Inventory management

Q1b Business Studies Inventory management Module 1 - Outcome 4

KoruKits is a small business that assembles STEM subscription boxes for schools. Each box contains one “Sensor Pack” component. Demand is seasonal: schools place most orders in February–April.

KoruKits buys Sensor Packs from a supplier located interstate. The supplier offers two purchasing options:

  • Option 1 (Bulk delivery): Order 1,000 Sensor Packs at a time. Unit purchase price is \$18 each. Delivery lead time is 3 weeks.
  • Option 2 (Frequent deliveries): Order 250 Sensor Packs at a time. Unit purchase price is \$19 each. Delivery lead time is 1 week.

KoruKits estimates its annual holding costs for Sensor Packs (insurance, storage space, handling, and obsolescence risk) average 25% of the purchase price per unit per year.

A recent product update means Sensor Packs can become outdated quickly. If a new version is released, any old Sensor Packs still in storage are likely to require discounting.

During the last peak season, KoruKits had one week of stockouts, which caused:
- late deliveries to schools
- overtime costs for catch-up assembly
- negative reviews that reduced repeat orders.

KoruKits uses a periodic stocktake system and is reviewing its inventory management approach, including whether FIFO, LIFO, or JIT would better support its operations strategy (cost, quality, speed, dependability, flexibility).

Question 1b

6 marks

KoruKits is preparing financial reports and must choose a cost flow assumption for Sensor Packs.

Assume the following purchases and usage occurred in March:
- Opening inventory: 200 units @ \$17
- Purchase 1: 300 units @ \$18
- Purchase 2: 250 units @ \$20
- Units used in assembly during March: 500 units

Calculate the closing inventory value at the end of March using:

  • FIFO
  • LIFO

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About This Business Studies Question

This is a free HSC HSC Business Studies practice question worth 6 marks, testing your understanding of Inventory management. It falls under operations strategies in Module 1: Operations. Submit your answer above to receive instant AI-powered marking and personalised feedback.

Subject
Business Studies – Higher School Certificate (NSW) HSC
Module 1
Operations
Outcome 4
operations strategies
Content Point
Inventory management

Content Point Detail

inventory management – advantages and disadvantages of holding stock, LIFO (last-in-first-out), FIFO (first-in-first-out), JIT (just-in-time)

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