Periodic Review Systems Definition
A periodic review system is a type of inventory management system in which inventory levels are monitored and reviewed at set intervals. The most common interval is monthly, but some systems may review inventory levels more or less frequently.
The main purpose of a periodic review system is to ensure that inventory levels are maintained at an optimal level. This helps to avoid both stock outs and excess inventory, both of which can lead to lost sales and/or increased costs.
In a periodic review system, eachSKUisreviewedattheendofeachperiodandtheinventorylevel for that SKU is adjusted accordingly. This means that the number of units of each SKU that are ordered and received will vary from period to period, depending on the results of the review.
A periodic review system can be contrasted with a perpetual inventory system, in which inventory levels are continuously monitored and updated in real-time. Perpetual inventory systems require more frequent reviews and adjustments, but can provide more accurate information about current inventory levels.
