What is Inventory Policy in a Fixed-Order Quantity System?

A fixed-order quantity system is one of the most important in inventory management. For that reason we need to look at how to compute the two variables that define it: the order quantity Q and the reorder point ROP. Before we do that, however, we need to look at the assumptions this system makes. Most importantly, the system assumes that all the variables occur at a constant rate and their values are known with certainty.