Which statement is true about ROQ?

Which statement is true about ROQ?

• A. ROQ is the amount to order each time the ROP is reached
• B. ROQ is the reorder point
• C. ROQ is the safety stock
• D. ROQ is the lead time

Answer: (A)

ROQ is the quantity you order when the stock level hits the reorder point. This is why the statement that ROQ is the amount to order each time the ROP is reached is correct. The reorder point is the trigger that signals you to place an order, based on expected demand during lead time and any safety stock. The reorder quantity, on the other hand, is the fixed amount you actually order to replenish stock. It is not the trigger (reorder point), not the safety stock (extra buffer), and not the lead time (the delay to receive the order). For example, if your ROP is 50 units and your ROQ is 150 units, when inventory drops to 50, you order 150 units.

ROQ is the quantity you order when the stock level hits the reorder point. This is why the statement that ROQ is the amount to order each time the ROP is reached is correct. The reorder point is the trigger that signals you to place an order, based on expected demand during lead time and any safety stock. The reorder quantity, on the other hand, is the fixed amount you actually order to replenish stock. It is not the trigger (reorder point), not the safety stock (extra buffer), and not the lead time (the delay to receive the order). For example, if your ROP is 50 units and your ROQ is 150 units, when inventory drops to 50, you order 150 units.