An Inventory System Answers Two Important Questions: When to Order

question 22

Multiple Choice

An inventory system answers two important questions: when to order and how much to order. Which of the following statements correctly explains how a Q system (continuous review system) or a P system (periodic review system) answers these questions?

• A) Under a Q system, a fixed quantity is ordered every P time period.
• B) Under a Q system, an order is placed to replenish the inventory position up to the target level T when the inventory position reaches the reorder point R.
• C) Under a P system, a fixed quantity Q is ordered when the inventory position reaches the reorder point R.
• D) Under a P system, an order is placed to replenish the inventory position up to the target level T every P time periods.

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Definitions:

Auctioneer

A person authorized to conduct sales by auction, taking bids, and declaring goods sold.

Offeror

The party in a contract negotiation who proposes the terms of an agreement to another party.

Bid Made

The act of offering a specific price for goods, services, or assets, especially in auctions or formal procurement processes.

UCC

Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.