Which of the following statements regarding a continuous review (Q)system for inventory control is FALSE?
A) The reorder point is the fixed quantity Q of the item that is ordered each time inventory is replenished.
B) The remaining inventory of an item is tracked every time a withdrawal is made.
C) On-hand inventory, scheduled receipts and backorders are used to calculate the inventory position.
D) A fixed quantity of inventory is ordered each time the inventory position reaches a predetermined minimum level.

Question

Quizplus · Accepted Answer

The reorder point is the level of inventory at which a new order should be placed, not the fixed quantity Q that is ordered each time. The quantity ordered each time may be determined by factors such as lead time, demand variability, and cost.

Which of the Following Statements Regarding a Continuous Review (Q)system