Fixed-time-period inventory models generate order quantities that vary from time period to time period, depending on the usage rate.

(A) True

(B) False

The correct answer is (A) True.

Explanation:

Fixed order period systems review inventory levels at fixed intervals of time and place orders that cover enough material so that inventory levels are recovered to a certain level. Orders are placed in equally spaced time intervals and the quantities ordered in each cycle are calculated using this formula:

Order quantity = Higher inventory target - Inventory level + EDDLT

The upper goal of the inventory is usually determined from the amount of space allocated to a material, either in a warehouse or on the shelves of a store. If at the time of the revision of the inventory level it is relatively low, larger quantities are placed. If, on the other hand, during the review the inventories are high, smaller amounts are placed.