Which one of the following descriptions of a base-stock system is best?
A)It is particularly attractive when review and ordering costs are both significant.
B)It can be seen as a way to minimize cycle inventory.
C)Examples include gasoline storage tanks at a service station.
D)An item's inventory is stored at two different locations or "bins."

Question

Quizplus · Accepted Answer

The description of a base-stock system being a way to minimize cycle inventory is the best choice as it concisely captures the main purpose of the system. While the other options can be true (A is often cited as a benefit of base-stock systems, C is an example of a base-stock system, and D refers to multi-location inventory systems which can include base-stock systems), they are not as comprehensive or accurate in describing what a base-stock system is.

Which One of the Following Descriptions of a Base-Stock System