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.

Question

Quizplus · Accepted Answer

Since there is no count of inventory during the review period in the fixed-period inventory system, there is a possibility of stockouts. This is a major disadvantage. The other options are not true. Ordering costs are usually lower in fixed-period inventory systems, no additional inventory records are required, the average inventory level is not necessarily decreased, and orders can be for any quantity.

A Disadvantage of the Fixed-Period Inventory System Is That