Periodic replenishment policies require more safety inventory than continuous review policies.

Question

Quizplus · Accepted Answer

Periodic replenishment policies specify fixed intervals for reviewing and replenishing inventory levels, regardless of actual demand during that period. Therefore, to safeguard against stockouts, periodic review policies require additional safety inventory to account for uncertain demand during the review period, leading to higher inventory holding costs compared to continuous review policies.

Periodic Replenishment Policies Require More Safety Inventory Than Continuous Review