Safety Stock is the additional amount of stock kept on hand to safeguard against the fluctuations in lead time, or fluctuations in demand or fluctuations in both these variables at the same point in time.
Reorder Level is the inventory level at which a company would place a new order or start a new manufacturing run.
CONTINUOUS REVIEW SYSTEM
A Continuous Review System is also termed as a reorder point system; it is sometimes also known as a fixed order quantity system or the Q-system.
It is a system designed to track the remaining inventory of an item each time a withdrawal is made to determine whether it is time to reorder or not.
PERIODIC REVIEW SYSTEM
Periodic Review System is an alternative inventory control system in which an item’s inventory position is reviewed periodically rather than continuously.
Periodic Review System, is basically the P-system, is also termed as the Fixed Interval Reorder System or Periodic Reorder System or P-system.
COMPARISON BETWEEN P-SYSTEM AND Q-SYSTEM
Fixed order interval
Varying order interval
Variable order sizes
Fixed order size
Convenient to administrator
Allows individual review frequencies
Orders may be combined
Possible quantity discounts
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