Question

The fixed-period inventory system requires more safety stock than a fixed-quantity system because: Select one:

a. this model is used for products that have large standard deviations of demand.
b. setup costs and holding costs are large.
c. a stockout can occur during the review period as well as during the lead time.
d. replenishment is not instantaneous.
e. this model is used for products that require very high service levels.

Answer 1

C) a stockout can occur during the review period as well as during the lead time.

Step-by-step explanation:

In a fixed-period inventory system replenishment orders are sent periodically or after a fixed time interval.

This type of inventory system is not very used anymore as more modern inventory systems are used now, like perpetual inventory system or just in time inventory management. It's not cost efficient.