The periodic order quantity (POQ) rule tends to keep more inventory on hand than the lot-for-lot rule, but less inventory on hand than the fixed order quantity rule.

Question

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The POQ rule balances the costs of inventory holding and ordering by ordering a fixed amount at fixed intervals. This tends to keep more inventory on hand than the lot-for-lot (which orders exactly what is needed for a period) rule, but less inventory on hand than the fixed order quantity (which orders a set amount each time inventory falls to a certain level) rule.

The Periodic Order Quantity (POQ) Rule Tends to Keep More