What does the periodic review model depend on?

The periodic review model is fundamentally based on predetermined scheduled reviews. This approach involves assessing inventory levels at specific intervals, rather than continuously monitoring stocks. The goal is to evaluate the current inventory status against a target level during these scheduled reviews and then place orders to replenish inventory as needed.

This method allows businesses to manage inventory effectively while reducing the costs associated with constant monitoring. It is particularly useful in environments where inventory demand is somewhat stable, but the actual demand can fluctuate. By reviewing inventory at regular intervals, businesses can adjust their order quantities based on anticipated demand and current stock levels, ensuring that they maintain sufficient inventory without excess.

While consistent inventory levels and continuous monitoring are relevant to inventory management in general, they do not specifically characterize the periodic review model. Customer order patterns can influence inventory decisions but are not the primary focus of how the periodic review model operates; instead, it emphasizes the scheduling and systematic review process.