The continuous review inventory system requires less safety stock compared to the periodic review inventory system.

Question

Quizplus · Accepted Answer

In a continuous review system, inventory levels are monitored constantly, and orders are placed whenever stock falls below a predetermined level, which can lead to lower safety stocks if reorder points and lead times are well-managed. However, in a periodic review system, inventory is checked at fixed intervals, and orders are placed to raise the inventory to a specified level, often requiring higher safety stock to cover the uncertainty during the review period and lead time.

The Continuous Review Inventory System Requires Less Safety Stock Compared