In a fixed-quantity system (FQS), as the reorder point increases:
A) the safety stock increases.
B) the safety stock decreases.
C) the number of orders increases.
D) the number of orders decreases.

Question

Quizplus · Accepted Answer

In a fixed-quantity system, the safety stock is calculated as the difference between the reorder point and the average daily demand during the lead time, multiplied by the lead time. Therefore, as the reorder point increases, the safety stock also increases. The number of orders is not affected by the reorder point in an FQS, as it remains fixed.

In a Fixed-Quantity System (FQS), as the Reorder Point Increases