MANAGEMENT

Detailed explanation-1: -In a fixed-order quantity system different items may reach reorder points at different times generating many orders at random intervals. On the other hand, a fixed-period system could ensure that inventory levels are checked on a regular basis for all items-say every two weeks.

Detailed explanation-2: -Fixed Order Point System: Any fixed order point system will monitor stock levels on a continuous basis. When the stock levels falls to a certain (fixed) point then an order is generated to replenish stocks.

Detailed explanation-3: -The economic order quantity (EOQ) is a company’s optimal order quantity that meets demand while minimizing its total costs related to ordering, receiving, and holding inventory. The EOQ formula is best applied in situations where demand, ordering, and holding costs remain constant over time.

Detailed explanation-4: -Which of the following is TRUE regarding the fixed-quantity ordering system? The same fixed amount is added to inventory every time an order for an item is placed. There is no physical count of inventory items after an item is withdrawn.