Question

The fixed-order quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and therefore quicker response to a potential stockout.a) trueb) false

Answer 1

The correct answer is True.

Step-by-step explanation:

The Wilson model is one of the first attempts to streamline inventory management. It was first developed by F.W. Harris in the early years of the 20th century. It is an assumption designed for companies that supply themselves through orders whose price is set regardless of the quantity transported.

Therefore, to calculate the ideal lot, the optimal order that minimizes costs, two opposing factors must be taken into account:

• The orders will be cheaper the fewer we place (their price is set regardless of the goods that make it up).
• Obviously, warehouse management will be more expensive the more goods have been stored.

Following the above reasoning:

• The more quantity of merchandise the orders have, the cheaper the order cost will be.
• The less quantity of merchandise the orders have, the cheaper the storage cost will be.