Asked by Ashley Rosario on May 20, 2024
Verified
Periodic replenishment policies require more safety inventory than continuous review policies.
Periodic Replenishment
Periodic Replenishment refers to the inventory management practice of ordering or producing goods at regular intervals, regardless of the inventory levels.
Continuous Review
A system of managing inventory where the stock levels are continuously monitored, with orders placed as soon as inventory drops to a predetermined level.
- Differentiate between periodic and continuous review policies regarding safety inventory levels.
Verified Answer
RB
richard bryantMay 21, 2024
Final Answer :
True
Explanation :
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.
Learning Objectives
- Differentiate between periodic and continuous review policies regarding safety inventory levels.
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