Question

In a continuous inventory system an order is placed:

A. for a variable amount whenever the inventory on hand decreases to less than the lead time demand.
B. for a variable amount after the passage of a fixed amount of time.C. for the same fixed amount whenever the inventory on hand decreases to a certain level.D. for the same constant amount after the passage of a fixed amount of time.

Answer 1

The correct answer is letter "C": for the same fixed amount whenever the inventory on hand decreases to a certain level.

Step-by-step explanation:

Perpetual Inventory or continuous inventory is a system that continually tracks inventory items for quantity and availability. This is accomplished by linking the accounting inventory system with the inventory receipts and point of sales systems along with the production system of the manufacture. In the case of orders, they are recorded for the same amount when the current inventory diminished by a certain quantity.