How does a fixed-point reordering system work?
A)When inventory level reaches 50 percent of maximum, the system orders new inventory.
B)When inventory level reaches 33 percent of maximum, the system orders new inventory.
C)At some preestablished inventory level, the system automatically orders new inventory.
D)At some random inventory level, the system automatically orders new inventory.

Question

Quizplus · Accepted Answer

A fixed-point reordering system is a type of inventory management system that automatically generates a new order when the inventory level of a particular product reaches a preestablished level. This level is usually set based on factors such as lead time, demand variability, and safety stock requirements. Therefore, the correct choice is C, as it reflects the definition of a fixed-point reordering system. Choices A and B are not necessarily correct, as the percentage levels mentioned are arbitrary and may not be appropriate for all products. Choice D is incorrect, as a fixed-point reordering system is based on predetermined inventory levels, not random ones.

How Does a Fixed-Point Reordering System Work