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Operations Management: Processes and Supply Chains, 12th Edition by Larry P. Ritzman, Manoj K. Malhotra, Lee J. Krajewski

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Periodic Review System

An alternative inventory control system is the periodic review (P) system, sometimes called a fixed interval reorder system or periodic reorder system, in which an item’s inventory position is reviewed periodically rather than continuously. Such a system can simplify delivery scheduling because it establishes a routine. A new order is always placed at the end of each review, and the time between orders (TBO) is fixed at P. Demand is a random variable, so total demand between reviews varies. In a P system, the lot size, Q, may change from one order to the next, but the time between orders is fixed. An example of a periodic review system is that of a soft-drink supplier making weekly rounds of grocery stores. Each week, the ...

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