Which statement describes how the order quantity for an ARC accredited agency is determined?

Which statement describes how the order quantity for an ARC accredited agency is determined?

• A. The order quantity equals current inventory minus maximum supply allowance.
• B. The order quantity equals maximum supply allowance minus current inventory.
• C. The order quantity equals current inventory plus maximum supply allowance.
• D. The order quantity equals current inventory times maximum supply allowance.

Answer: (B)

The main idea is replenishing stock up to a defined target level. The order quantity is the gap between the maximum supply allowance (the target inventory level ARC wants you to hold) and what you currently have. So you order just enough to bring your stock up to that maximum. For example, if the target is 100 units and you have 70, you order 30. If you already have 105, you wouldn’t place an order. This approach keeps inventory at an agreed-on level rather than overshooting. The other formulas would either produce a negative quantity, add inventory to a level you already exceed, or multiply quantities, none of which align with reaching a set target.

The main idea is replenishing stock up to a defined target level. The order quantity is the gap between the maximum supply allowance (the target inventory level ARC wants you to hold) and what you currently have. So you order just enough to bring your stock up to that maximum. For example, if the target is 100 units and you have 70, you order 30. If you already have 105, you wouldn’t place an order. This approach keeps inventory at an agreed-on level rather than overshooting. The other formulas would either produce a negative quantity, add inventory to a level you already exceed, or multiply quantities, none of which align with reaching a set target.