In the periodic review system, the order quantity is the same for each order. Is this statement true?

In the periodic review system, the order quantity is the same for each order. Is this statement true?
A . No, the next order quantity must be larger than the previous one
B . No, the inventory position at each review point differs from each other
C . Yes, in periodic review system items are reviewed when the Kanban is triggered
D . Yes, the order quantity should be equal to economic order quantity

View Answer

Answer: B

Explanation:

Fixed-Time Period System (or Periodic Review system) is the inventory management system in which

inventory is checked in fixed time periods, T, and the quantity ordered varies. The system also

contains a target inventory level, R, which is restored when order received.

The order quantity is calculated as:

Q=RCIP

where: Q = order quantity

R = target inventory level

IP = inventory position

Inventory position (IP) is equal to inventory on-hand plus quantity on order minus backorder (if any) The order quantity varies because the inventory position at each review point differs from each other.

LO 2, AC 2.3