Which of the following statements is true of a fixed-period system (FPS)
A) It orders a fixed quantity of items when the inventory position reaches or drops below the reorder point (r).
B) It orders sufficient stock at the time of review to bring the inventory position up to the replenishment level (M).
C) It maintains a constant order quantity every review period.
D) It checks the inventory position on a continuous basis.

Question

Quizplus · Accepted Answer

In a fixed-period system (FPS), orders are placed at the end of a fixed period, but the quantity ordered varies. The goal is to bring the inventory level up to a predetermined level, known as the replenishment level (M), based on the current inventory position and future needs. This system does not maintain a constant order quantity (as in a fixed-quantity system) nor does it check inventory continuously; it reviews inventory at fixed intervals.

Which of the Following Statements Is True of a Fixed-Period