Final answer:
In a continuous review system, stockouts should occur rarely due to real-time monitoring and ordering, though occasional stockouts can still happen due to unforeseen demand or supply issues.
Step-by-step explanation:
When using the continuous review system, stockouts can occur occasionally. This system involves monitoring the inventory levels continuously and placing orders when stock levels drop to a certain reorder point. The frequency of stockouts depends on several factors such as demand variability, lead times, and the accuracy of demand forecasting. While the system aims to minimize stockouts by responding to inventory levels in real-time, unforeseen fluctuations in demand or supply can still lead to occasional stockouts. However, a well-implemented and managed continuous review system should lead to stockouts happening rarely rather than frequently or predictably.