The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked. True or false?

Question

Physics

Ryker Holden

14 January, 17:44

The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked. True or false?

+4

Answers (1)

Know the Answer?

Haylie Donaldson · Answer 1

Answer: False

Explanation: In the fixed-order quantity inventory system, a fixed quantity of stock is ordered when stock replenishment level is attained or reached. However, in fixed-time period inventory, there is a target level of stock and the inventory is monitored during a fixed time interval, so that the inventory is restored back to its target level. The fixed-time period requires carrying out safety stock routine in other to prevent stock-out during periods of high demand and has such maintain a higher average inventory.