Which of the following inventory management techniques is most responsive to changes in demand levels?

Which of the following inventory management techniques is most responsive to changes in demand levels?
A . Two-bin system
B . Periodic review system
C . Cycle counting
D . ABC classification

View Answer

Answer: B

Explanation:

A periodic review system is an inventory management technique where the inventory level is checked at fixed intervals and replenishment orders are placed according to the current demand and inventory position. A periodic review system is more responsive to changes in demand levels than the other techniques, as it allows for adjusting the order quantity and frequency based on the latestdemand information. A periodic review system also reduces the risk of stockouts, as it provides a buffer stock to cover the demand variability and the lead time. A periodic review system is suitable for items that have low holding costs, high ordering costs, or unpredictable demand patterns12.

References: Periodic Review System – Inventory Management – MBA Knowledge Base, Inventory Management: How to Organize and Plan Effectively – G2