Fixed Quantity Inventory Model

Posted in Operations and Supply Chain Terms, Total Reads: 431

Definition: Fixed Quantity Inventory Model

It is a basic inventory model where we place a fixed order and as we use it day by day, its quantity falls below a certain level. In order to restock/restore the same quantity, we reorder that particular quantity.

This model has certain assumptions, which include that the demand won’t have any variability. Also, the lead and holding costs are taken as fixed.

Yet, it is one of the best models related to inventory.

Safety stock is one of the cases when we order more than required so that in case the demand goes up by a huge margin, we need not order again and again.

It’s the same as fixed reorder inventory model.


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