Two Fundamental Inventory Decisions Are When to Order and How

question 71

Multiple Choice

Two fundamental inventory decisions are when to order and how much to order.Which of the following statement is true with respect to Fixed Quantity (FQS) and Fixed Period (FPS) inventory systems?

• A)A FPS orders a fixed period quantity when the inventory position reaches or drops below the reorder point (r).
• B)A FPS must cover a time period of T + L to cover the risk of a stock out.
• C)A FPS places an order for the economic order quantity every T time units.
• D)A FQS places an order to replenish the inventory position up to a target level (M) when the inventory position reaches the reorder point (r).

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Definitions:

Definite Period

A specified duration of time with clearly defined start and end points.

Reliable Evidence

Information that is trustworthy and dependable in supporting facts or conclusions in various contexts, such as legal trials or scientific research.

Sale of Land

A legal transaction where ownership of a piece of real estate is transferred from the seller to the buyer, according to agreed terms.

Real Property

Land and anything permanently attached to it, such as buildings and structures, recognized by law.