What best distinguishes periodic-review from continuous-review systems?

• A. Periodic-review specifies a fixed review interval; continuous-review triggers reorder when on-hand drops to the reorder point.
• B. Continuous-review uses a fixed order quantity at regular intervals.
• C. Periodic-review uses forecast-driven planning.
• D. Both are the same.

Answer: (A)

The main idea being tested is how the timing of replenishment decisions differs between the two systems. In a periodic-review setup, you check inventory at fixed, regular intervals and place an order to raise stock up to a target level at each check. In a continuous-review setup, you monitor inventory continuously and immediately place an order whenever the on-hand stock hits a reorder point, typically for a fixed order quantity. So the defining distinction is fixed review intervals versus a trigger based on stock level.

That’s why the correct choice is the best: it states that periodic-review uses a fixed review interval, while continuous-review triggers when the on-hand drops to the reorder point. The other options don’t capture that core timing difference: one asserts fixed-interval ordering for continuous-review (not accurate), another suggests forecasting is the unique feature of periodic-review (forecasting is used in many contexts), and saying the systems are the same is simply incorrect.