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 implies that when the inventory level reaches 14 gearboxes, an order of 100 gearboxes should be placed, which means 14 is the reorder point (the point at which a new order should be placed) and 100 is the order quantity (the quantity to be ordered).

An Inventory Decision Rule States,"When the Inventory Level Goes Down