In a periodic review system, orders are placed:

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BlackTom AI · Accepted Answer

Question restatement: In a periodic review system, orders are placed:

Option 1: 'When ROP is reached' — This describes a continuous (or continuous-review) replenishment policy where reorder point triggers a purchase. In a periodic review system, orders are not triggered by a specific stock level reaching a point, but rather by time intervals, so this statement describes a different policy.

Option 2: 'At fixed intervals to reach a target level' — This aligns with the periodic review approach: inventory is reviewed at regular, fixed time intervals, and an order is placed to raise the inventory position up to a target level (often called the order-up-to level). This is the core characteristic of periodic review.

Option 3: 'When safety stock hits zero' — This would imply a depletion-driven trigger tied to stock on hand rather than a planned, time-based review. It does not describe the predefined, regular interval-based process of periodic review.

Option 4: 'Only once per year' — The frequency of a periodic review is determined by policy and operational needs, not inherently by a yearly limit. Periodic reviews can be done monthly, quarterly, etc., as defined by the system, so this statement is unnecessarily restrictive and inaccurate as a defining feature.

Additional notes: In a periodic review (P-system), the cycle length is fixed; orders are placed at the end of each period to raise the inventory position to the target level, P. The distinction from a continuous-review (Q-system) is exactly this: fixed intervals vs. continuous triggering.

Summary: The option that correctly describes a periodic review system is the one that states orders are placed at fixed intervals to reach a target level, reflecting the time-based, target-level replenishment mechanism.

In a periodic review system, orders are placed:

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