Which of the Following Statements Regarding a Periodic Review (P)system

question 134

Multiple Choice

Which of the following statements regarding a periodic review (P) system for inventory control is FALSE?

• A) An item's inventory position is reviewed periodically rather than continuously.
• B) The quantity ordered each time is a fixed lot size Q equal to the reorder point (R).
• C) Stockout protection is required for a longer time interval than continuous review systems for inventory control.
• D) The target inventory level is set based on the average demand during the protection period plus safety stock.

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Definitions:

Sell the Stock

An action where an investor disposes of their ownership in a corporation through the sale of its shares.

Maintenance Margin

The minimum equity amount that must be maintained in a margin account after a purchase has been made, to cover the risk of the investment.

Margin Call

A demand by a broker that an investor deposit further cash or securities to cover possible losses.

Initial Margin

The minimum amount of equity required to enter into a position as security for performance, used in futures and margin trading.