ACCA Management Accounting (F2) Certification Practice Exam 2025 - Free Practice Questions and Study Guide

The scenario indicating when to reorder inventory based on the average inventory calculation is when average inventory is less than safety inventory.

Safety inventory acts as a buffer to protect against fluctuations in demand or supply chain delays. By maintaining a safety inventory level, businesses can ensure they meet customer demand even when faced with unforeseen circumstances. The average inventory calculation helps in assessing whether current stock levels are sufficient. If average inventory falls below the established safety stock level, it signals that a reorder is necessary to avoid stockouts and maintain service levels.

This approach balances holding costs with the risk of running out of inventory, ensuring that inventory management supports operational efficiency and customer satisfaction. The other scenarios presented do not directly relate to the same principles of using average inventory for determining reorder points.