Fixed-Period (P ) Systems
The inventory models that we have considered so far are fixed-quantity, or Q, systems. That is, the same fixed amount is added to inventory every time an order for an item is placed. We saw that orders are event triggered. When inventory decreases to the reorder point (ROP), a new order for Q units is placed.
To use the fixed-quantity model, inventory must be continuously monitored.7 This requires a perpetual inventory system. Every time an item is added to or withdrawn from inventory, records must be updated to determine whether the ROP has been reached. In a fixed-period system (also called a periodic review, or P system), on the other hand, inventory is ordered at the end of a given period. Then, and only then, is ...
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