Section 7: Fixed-Period (P) Systems

Q is to ________ systems as P is to ________ systems. A) fixed quantity, fixed period B) variable demand, constant demand C) variable lead time, variable demand D) variable quantity, variable period E) quality, price

A

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.

A

Which of the following is a requirement of Q systems? A) perpetual inventory system B) constant order spacing C) variable lead time D) constant demand E) all of the above

A

An advantage of the fixed-period inventory system is that: A) safety stock will be lower than it would be under a fixed-quantity inventory system. B) there is no physical count of inventory items when an item is withdrawn. C) no inventory records are required. D) orders usually are for smaller order quantities. E) the average inventory level is reduced.

B

A disadvantage of the fixed-period inventory system is that: A) it involves higher ordering costs than the fixed quantity inventory system. B) additional inventory records are required. C) the average inventory level is decreased. D) since there is no count of inventory during the review period, a stockout is possible. E) orders usually are for larger quantities.

D

What is the difference between P and Q inventory systems? A) order size B) order spacing C) maximum service level D) lead time length E) A and B

E

Which of the following should be higher in P systems than Q systems? A) lead time B) demand C) order size D) order spacing E) safety stock

E

Describe the difference between a fixed-quantity and a fixed-period inventory system?

In a fixed-quantity inventory system, when the quantity on hand reaches the reorder point, an order is placed for the specified quantity. In a fixed-period inventory system, an order is placed at the end of the review period. The quantity ordered is that needed to bring inventory up to a specified level.

What is a fixed-period system?

It is a system in which inventory orders are made at regular time intervals.

The fixed-period inventory model can have a stockout during the review period as well as during the lead time, which is why fixed-period systems require more safety stock than fixed-quantity systems.

True

A(n) ________ system triggers inventory ordering on a uniform time frequency.

fixed-period (or P)