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Review Systems – Lesson Summary

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SAFETY STOCK
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
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




P-System
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