For the periodic review model with probabilistic demand,the order quantity at each review period must be sufficient to cover demand for
A)the lead time for the current order
B)the review period
C)the review period plus the lead time for the following order
D)the lead time for the current order plus the lead time for the following order

Question

Quizplus · Accepted Answer

In a periodic review model with probabilistic demand, the order quantity at each review period must be sufficient to cover demand for the review period and also the demand during the lead time for the next order. This ensures that there is enough inventory to fulfill customer demand during the review period and also during the time it takes to receive the next order from the supplier. Therefore, option C is the best choice. Options A and D include either only the current order's lead time or both the current and next order's lead time, which would result in either insufficient inventory or excessive inventory, respectively. Option B only considers the review period, which is not enough to meet customer demand during the entire period between two reviews.

For the Periodic Review Model with Probabilistic Demand,the Order Quantity