For a given item controlled by a periodic review system the target level is 100 units. If there are 40 units on the shelf and the lead time is 2 weeks then the order quantity should be:
A) 140 units
B) 120 units
C) 85 units
D) 60 units
E) 40 units

Question

Quizplus · Accepted Answer

In a periodic review system, the order quantity is calculated as the target level minus the current inventory level. Here, the target level is 100 units and there are 40 units on the shelf, so the order quantity should be 100 - 40 = 60 units. Lead time does not affect the order quantity in this calculation.

For a Given Item Controlled by a Periodic Review System