Append below a table to show the advantages and disadvantages on using the Periodic Review Inventory Control system:
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ADVANTAGES of Periodic Review Control System: |
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DISADVANTAGES of Periodic Review Control System: |
| 1 |
All stock items are reviewed periodically so that there is likely to be less obsolete stocks |
1 |
In general larger stocks are required, as re-order quantities must take account of the period between reviews as well as lead times |
| 2 |
Economies in placing orders may be gained by spreading the purchased office load more evenly |
2 |
Re-order quantities are not at optimum level of a correctly calculated EOQ |
| 3 |
Larger quantity discounts may be obtained when a range of stock items are ordered at the same time from a supplier |
3 |
Less responsive to changes in consumption. If the rate of usage change shortly after a review, a stock-out may well occur before the next review |
| 4 |
Because orders will always be in the same sequence, there may be production economies due to more efficient production planning being possible and lower set up costs. |
4 |
Unless demands are reasonably consistent, it is difficult to set appropriate periods for review. |
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