Question

A company makes tools, such as hammer and tape measures. One of their primary raw materials is steel and if they run out of steel they cannot make tools. The inventory level for steel is constantly monitored and when the reorder point is reached, an order is released for the economic order quantity The tool company uses which of the following independent demand inventory systems for steel?

A. periodic review system
B. work-in-process (WIP) system
C. single period system
D. continuous review system

Answer 1

Answer: Option D

Explanation: In simple words, continuous review system refers to the inventory management system in which the stock level is calculated every time any part of the inventory moves ion or out of the system. This is considered to be a traditional system.

In the given case, The company is constantly monitoring inventory level to know whether they need more or not. Hence they are using continuous review system.