The Fixed-Period Inventory System Requires More Safety Stock Than a Fixed-Quantity

question 186

Multiple Choice

The fixed-period inventory system requires more safety stock than a fixed-quantity system because:

• A) a stockout can occur during the review period as well as during the lead time.
• B) this model is used for products that have large standard deviations of demand.
• C) this model is used for products that require very high service levels.
• D) replenishment is not instantaneous.
• E) setup costs and holding costs are large.

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Definitions:

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Gustatory Cortex

Brain region involved in the perception of taste.