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What are two advantages and disadvantages of the periodic inventory system?

a) Real-time tracking, higher cost
b) Lower cost, delayed tracking
c) Real-time tracking, lower cost
d) Higher cost, delayed tracking

1 Answer

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Final answer:

The correct answer is option b) Lower cost, delayed tracking. This is because the periodic inventory system is less expensive but does not provide real-time inventory tracking.

Step-by-step explanation:

The question concerns the advantages and disadvantages of the periodic inventory system. When considering the options given, the correct answer that outlines two characteristics of a periodic inventory system is:

  • Lower cost, as periodic inventory systems generally require less investment in technology and labor to maintain.
  • Delayed tracking, as this type of inventory system does not update inventory levels immediately after each transaction, leading to a less accurate picture of inventory levels between physical counts.

The disadvantages can be significant for businesses that require up-to-date inventory information for operation, and though costs are saved, the delay in tracking can lead to issues such as stockouts and overstocking.

User Jonathon Rossi
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