One limitation with parstock levels is?

One limitation with parstock levels is?

• A. Requires real-time data integration
• B. Accounts for spoilage costs
• C. Does not consider the cost of food or ordering
• D. Guarantees optimal inventory

Answer: (C)

Parstock levels are a fixed minimum you keep on hand to prevent stockouts. A key limitation is that this approach doesn’t consider the costs involved—specifically, the cost of the food itself and the cost of placing orders. Because those costs aren’t part of how par stock is set, you can end up holding more inventory than you should (driving carrying costs) or missing potential savings from buying more strategically. It also means they don’t account for spoilage costs, ordering costs, or variability in demand and lead times, so they don’t guarantee an optimal balance between availability and total cost.

Parstock levels are a fixed minimum you keep on hand to prevent stockouts. A key limitation is that this approach doesn’t consider the costs involved—specifically, the cost of the food itself and the cost of placing orders. Because those costs aren’t part of how par stock is set, you can end up holding more inventory than you should (driving carrying costs) or missing potential savings from buying more strategically. It also means they don’t account for spoilage costs, ordering costs, or variability in demand and lead times, so they don’t guarantee an optimal balance between availability and total cost.