If variability of demand were the only source of uncertainty, the order quantity and reorder-point decision could be based on a single-period inventory model.

Question

Quizplus · Accepted Answer

A single-period inventory model takes into account only one cycle of ordering and selling. Since variability of demand is the only source of uncertainty, the decision can be based on this one cycle and a single-period inventory model would suffice. However, in reality, there may be other sources of uncertainty such as lead time variability, supply chain disruptions, etc. which would require a multi-period inventory model to make more accurate ordering decisions.

If Variability of Demand Were the Only Source of Uncertainty