Deciding when to place an order to purchase inventory is determined by (1)the rate of sales and (2)the time required to receive new stock.

Question

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The rate of sales and time required to receive new stock are two important factors in determining when to place an order to purchase inventory. When the rate of sales is high and the time required to receive new stock is long, it is advisable to place orders to purchase inventory in advance to avoid stockouts. Conversely, when the rate of sales is low and the time required to receive new stock is short, orders to purchase inventory can be delayed.

Deciding When to Place an Order to Purchase Inventory Is