An inventory decision rule states "when the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is true?
A) One hundred is the reorder point, and 14 is the order quantity.
B) Fourteen is the reorder point, and 100 is the order quantity.
C) The number 100 is a function of demand during lead time.
D) Fourteen is the safety stock, and 100 is the reorder point.
E) None of the above is true.

Question

Quizplus · Accepted Answer

The inventory decision rule specifies that when the inventory level decreases to 14 gearboxes, 100 gearboxes will be ordered. Therefore, 14 is the reorder point because it is the inventory level at which the replenishment is triggered, and 100 is the order quantity because it is the number of gearboxes to be ordered.

An Inventory Decision Rule States "When the Inventory Level Goes