b. more than 5 but less than or equal to 10 weeks.
c. more than 10 but less than or equal to 15 weeks.
d. more than 15 but less than or equal to 20 weeks.
48. Cynthia Baker, manager of a large medical supply house that operates 50 weeks per year
and 5 days per week, has decided to implement a fixed-period inventory system for all class A
items. One such item has the following characteristics:
Demand = 10,000 units/year
Order cost = $50/order
Holding cost = $5/unit/year
If Cynthia wishes to minimize the total cost (thereby approximating the economic order
quantity (EOQ)), what should be the value of T, the number of workdays between orders (i.e.,
a. Less than or equal to 8 days
b. Greater than 8 but less than or equal to 10 days
c. Greater than 10 but less than or equal to 12 days
d. Greater than 12 but less than or equal to 14 days
49. Two fundamental inventory decisions are: when to order and how much to order. Which of
the following statement is TRUE about fixed-quantity (FQS) and fixed-period (FPS) inventory
a. An FPS orders a fixed-period quantity when the inventory position reaches or passes the reorder
b. An FPS must cover a time period of T + L to cover the risk of a stockout.
c. An FPS places an order for an economic order quantity (EOQ) on a continuous basis.
d. An FQS places an order to replenish the inventory position up to a target level (M) when the
inventory position reaches the reorder point (r).
50. Which is NOT a feature of the periodic review system?
The order quantity, Q, is always fixed.
The inventory position need not be monitored on a continuous basis.
The review period, T, is constant.
Placing an order is time-triggered.
51. Which of the following statements is NOT TRUE regarding the fixed-period system (FPS)?
The time between orders is constant, but the order quantity might vary.
An order is time-triggered, not inventory-triggered.
The optimal replenishment level includes the demand during the review period, plus any
desired safety stock.