Append below a table to show the advantages and disadvantages on using the Periodic Review Inventory Control system:
|ADVANTAGES of Periodic Review Control System:
|DISADVANTAGES of Periodic Review Control System:
|All stock items are reviewed periodically so that there is likely to be less obsolete stocks
|In general larger stocks are required, as re-order quantities must take account of the period between reviews as well as lead times
|Economies in placing orders may be gained by spreading the purchased office load more evenly
|Re-order quantities are not at optimum level of a correctly calculated EOQ
|Larger quantity discounts may be obtained when a range of stock items are ordered at the same time from a supplier
|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
|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.
|Unless demands are reasonably consistent, it is difficult to set appropriate periods for review.
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