Question

One of the following statements about PRS (Periodic Recording System) is not true.

• A. PRS is useful in control of perishable items
• B. PRS provides basis for adjustments to account for variations in demand
• C. In PRS, inventory holding costs are higher than in Fixed Reorder Quantity System
• D. PRS requires continuous monitoring of inventory levels

Answer 1

The correct option is D PRS requires continuous monitoring of inventory levels

In the periodic reordering system, Inventory level is reviewed after a fixed period of time and fresh order is placed at that time. So, PRS doesn't require continuous monitoring of inventory levels.

$\text{Points to Remember:}$

Two types of review system are used:

(i) Fixed order system or reorder point system.
(ii) Periodic reordering system or fixed period system.