Periodic review policies require
A)more safety inventory than continuous review policies for the same level of product availability.
B)less safety inventory than continuous review policies for the same level of product availability.
C)the same safety inventory as continuous review policies for the same level of product availability.
D)no more safety inventory than continuous review policies for the same level of product availability.

Question

Quizplus · Accepted Answer

Periodic review policies typically require more safety inventory than continuous review policies to account for the uncertainty during the review period. In a periodic review system, inventory levels are checked at fixed intervals, and orders are placed to replenish stock up to a certain level. This system must account for the demand variability that occurs between reviews, leading to a need for more safety stock compared to a continuous review system, where inventory levels are constantly monitored and orders can be placed more frequently to adjust for changes in demand.

Periodic Review Policies Require