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:

Ending Raw Materials

is the value of all raw materials that remain unused at the end of an accounting period, which will be used in future production processes.

Budgeted Materials Purchases

The projected amount of materials to be bought for production as planned within a budget period.

April 1 Inventory

The inventory on hand at the beginning of the company's fiscal quarter or year, typically recorded on the first day of April.

Ending Raw Materials

The value of raw materials inventory available at the end of an accounting period.