The fixed-period inventory model can have a stockout during the review period as well as during the lead time, which is why fixed-period systems require more safety stock than fixed-quantity systems.

Question

Quizplus · Accepted Answer

Fixed-period systems only order at predetermined time intervals, which means that inventory levels may be lower than needed during the review period and lead time. This increases the risk of stockouts and requires more safety stock to compensate for this variability. In contrast, fixed-quantity systems order a specific amount each time inventory levels reach a certain point, reducing the risk of stockouts during the review period.

The Fixed-Period Inventory Model Can Have a Stockout During the Review