Periodic review

What is periodic review?

Periodic review is a method of inventory control and management in which the level of inventory is reviewed and replenished at regular intervals, such as weekly, biweekly, or monthly. During each review period, the current inventory level is set to cover the expected demand during the review period, plus a safety stock.

The goal is to maintain a balance between holding too much inventory, which increases carrying costs, and holding too little inventory, which can result in stockouts and lost sales.

What is the difference between continuous and periodic review?

The main difference between the two review types is the frequency of inventory review and ordering. Periodic review involves reviewing inventory levels and placing orders at fixed intervals based, while continuous review involves continuous monitoring of inventory levels and ordering when inventory levels reach a reorder point.

The choice between these two depends on factors such as the demand variability, lead time, and value of the items, as well as the resources and capacity of the organization.