How Does a Fixed-Point Reordering System Work

question 60

Multiple Choice

How does a fixed-point reordering system work?

• A)When inventory level reaches 50 percent of maximum, the system orders new inventory.
• B)When inventory level reaches 33 percent of maximum, the system orders new inventory.
• C)At some preestablished inventory level, the system automatically orders new inventory.
• D)At some random inventory level, the system automatically orders new inventory.

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Definitions:

Short Run

A period in which at least one factor of production is fixed, limiting the ability of a firm to adjust to changes in market demand or supply.

Long-Run Industry

A period in which all factors of production and costs can be variable, allowing for adjustment to changes in market conditions.

Zero-Profit Equilibrium

A situation where a firm's total revenues exactly equal its total costs, resulting in no economic profit.

Entry

The act of entering or moving into a market or area of business to start operations or activities.