Kitchens Unlimited has an inventory decision rule which states that "when the inventory level goes down to 20 cabinets, an order for 50 cabinets will be placed." Which of the following statements best describes their inventory management policy?
A) They are pursuing a reorder point policy.
B) They monitor their inventory continuously.
C) Twenty is the amount of the safety stock, and 50 is the order quantity.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

This scenario describes a reorder point policy where a specific inventory level (20 cabinets) triggers a new order (for 50 cabinets). It implies continuous monitoring to know when inventory reaches this level. The statement about safety stock and order quantity is a reasonable interpretation of the given numbers, making all the statements correct.

Kitchens Unlimited Has an Inventory Decision Rule Which States That