Which of the following statements regarding a periodic review (P) system for inventory control is FALSE?
A) Stockout protection is required for a longer time interval than continuous review systems for inventory control.
B) The target inventory level is set based on the average demand during the protection period plus safety stock.
C) The quantity ordered each time is a fixed lot size Q equal to the reorder point (R).
D) An item's inventory position is reviewed periodically rather than continuously.

Question

Quizplus · Accepted Answer

In a periodic review system, the order quantity is not a fixed lot size but rather the difference between the target inventory level and the current inventory position.

Which of the Following Statements Regarding a Periodic Review (P)