The fixed-period inventory model requires more safety stock than the fixed-quantity models 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

Question

Quizplus · Accepted Answer

In the fixed-period inventory model, inventory is only reviewed and ordered after a fixed amount of time, which means that a stockout can occur during the review period as well as during the lead time. This requires more safety stock to ensure that inventory levels are sufficient to meet demand during both periods.

The Fixed-Period Inventory Model Requires More Safety Stock Than the Fixed-Quantity