The order quantity in a periodic review system rises as the on-hand inventory falls.

Question

Quizplus · Accepted Answer

In a periodic review system, the order quantity is typically replenished to a target inventory level at a set review period, regardless of the on-hand inventory level. However, if the on-hand inventory falls below a certain level, a larger order quantity may be placed to bring the inventory back up to the target level. Therefore, the order quantity can rise as the on-hand inventory falls, making statement A true.

The Order Quantity in a Periodic Review System Rises as the On-Hand