Question

Explain how the applications of inventory management for fixed quantities differ from those for fixed time periods. Give specific instances in which you would use a fixed time period model rather than a fixed quantity model. Provide real-world examples.

Answer 1

The main difference between the fixed quantity and fixed time period is that the fixed quantity makes it mandatory for a fixed number of items to be ordered every time an order is made, while the fixed time period has a fixed period orders are received before the next order period.

Explanation:

The fixed quantity model is adopted by producers of a product to maintain a package type and also to maximize the profit derived from sales. For example is when ordering or buying eggs from a store, the buyer cannot purchase five eggs since it is packaged in a dozen (12), and so must buy the whole package.

The fixed time model uses time intervals to receive and accumulate orders before delivery is made for every order interval.