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

Question

Quizplus · Accepted Answer

The statement is true. In fixed-period inventory systems, stockouts may occur during the review period or the time between order placements. Hence, safety stock is required to cover any unexpected demand during this period, and more safety stock is needed compared to fixed-quantity inventory models where orders are placed whenever the inventory level reaches a certain point.

The Fixed-Period Inventory Model Can Have a Stockout During the Review