Question

The key difference between a fixed-order-quantity inventory model where demand is known and one where demand is uncertain is in computing the reorder point. True or False?

Answer 1

The correct answer is True.

Step-by-step explanation:

In fact, when there is a variable quantity of stocks, it is not known for sure the moment when the inventory will be equal 0, however, this scenario is the least expected by an organization that has made a proper planning of its production, since This would be a delay in the entire production chain.

What is usually done in cases where the real demand is not known, is to consider a minimum stock level, which is the optimal moment in which the purchase of raw material that allows to meet the demand and that it is not harmed should be requested due to the depletion of inputs.