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 order of inventory during the review period, a stockout is possible.
E) orders usually are for larger quantities.

Question

Quizplus · Accepted Answer

The fixed-period inventory system involves placing orders at fixed intervals of time, meaning that there is a risk of stockouts if the inventory runs out before the next order is placed. This can lead to lost sales and dissatisfied customers. The other options are not disadvantages of the fixed-period inventory system.

A Disadvantage of the Fixed-Period Inventory System Is That