Question

A major retail chain store monitors the sales of Pop Tarts. Each store is suggested to carry 60 boxes and not allow the inventory to drop below 20 boxes. The computer registers sales of Pop Tarts in real time. When the inventory drops below 20 boxes, an automatic order for 100 boxes is generated. What type of inventory management system is being described here?

A) Just-in-time inventory management

B) Perpetual inventory system

C) Economic order quantity system

D) Reorder point inventory system

Answer 1

The described system is a Reorder Point Inventory System, where a set inventory level triggers an automatic reorder of Pop Tarts when the stock falls below 20 boxes.

Step-by-step explanation:

The inventory management system described in the question is a Reorder Point Inventory System. In this system, a specific level of inventory is set as the reorder point, which, in this case, is 20 boxes of Pop-Tarts. When the inventory falls below this level, an automatic reorder is triggered, which in this case is for 100 boxes. This system helps prevent stockouts by ensuring that inventory is replenished before it reaches critically low levels, but it does not involve the just-in-time delivery of goods or calculations for economic order quantity.