Two Fundamental Inventory Decisions Are: When to Order and How

Multiple Choice

Two fundamental inventory decisions are: when to order and how much to order. Which of the following statement is TRUE about fixed-quantity (FQS) and fixed-period (FPS) inventory systems?

A) An FPS orders a fixed-period quantity when the inventory position reaches or passes the reorder point (r) .
B) An FPS must cover a time period of T + L to cover the risk of a stockout.
C) An FPS places an order for an economic order quantity (EOQ) on a continuous basis.
D) An FQS places an order to replenish the inventory position up to a target level (M) when the inventory position reaches the reorder point (r) .