Safety stock levels for a periodic review model tend to be _________ when compared to a reorder point model.

Question

Quizplus · Accepted Answer

Safety stock levels for a periodic review model tend to be higher because the inventory level is only checked periodically, typically at fixed intervals, which may result in situations where demand exceeds what was estimated during that period. As a result, a higher safety stock is needed to mitigate stockouts until the next review period. In contrast, in a reorder point model, the inventory level is continuously monitored, and a stock replenishment order is triggered as soon as the inventory level reaches a specific reorder point, reducing the need for a higher safety stock.

Safety Stock Levels for a Periodic Review Model Tend to Be