An inventory decision rule states "when the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is true?
A) One hundred is the reorder point, and 14 is the order quantity.
B) Fourteen is the reorder point, and 100 is the order quantity.
C) The number 100 is a function of demand during lead time.
D) Fourteen is the safety stock, and 100 is the reorder point.
E) The re-order point cannot be determined from this statement.

Question

Quizplus · Accepted Answer

The inventory decision rule states that the order quantity is 100 gearboxes and the reorder point is 14 gearboxes. Therefore, option B is the correct choice as it matches with the given information. Option A and D are incorrect as the reorder point and safety stock are opposite concepts. Option C is not applicable to this statement. Option E is incorrect as the reorder point is explicitly mentioned in the statement as 14 gearboxes.

An Inventory Decision Rule States "When the Inventory Level Goes