Which one of the following statements concerning a continuous review system is BEST?
A)The inventory position (IP)of an item measures the item's ability to satisfy future demand,relying only on the on-hand inventory.
B)An item's inventory position under a continuous review system increases by Q units as soon as an order is received.
C)An item's on-hand inventory increases by Q units as soon as an order is placed.
D)Under a continuous review system,an item's inventory position corresponds to the on-hand inventory unless there are backorders or one or more scheduled receipts.

Question

Quizplus · Accepted Answer

A continuous review system is a method of inventory management in which the inventory level of an item is constantly monitored and a new order is placed when the inventory level reaches a predetermined reorder point. Under this system, an item's inventory position corresponds to the on-hand inventory unless there are backorders or one or more scheduled receipts, making choice D the best statement. Choices A, B, and C are incorrect as they do not accurately describe the behavior of a continuous review system.

Which One of the Following Statements Concerning a Continuous Review