The fixed-order-interval model requires a larger amount of safety stock than the ROP model for the same risk of a stockout.

Question

Quizplus · Accepted Answer

The fixed-order-interval model typically requires a larger safety stock because orders are placed at fixed intervals, and the inventory must cover the demand variability during these intervals, unlike the ROP (Reorder Point) model which triggers orders based on inventory levels, allowing for more responsive adjustments to demand changes.

The Fixed-Order-Interval Model Requires a Larger Amount of Safety Stock