Which inventory system requires a physical count of items in inventory to be made at periodic intervals?

• A. Periodic inventory system
• B. Perpetual inventory system
• C. Consignment inventory system
• D. Just-in-time inventory system

Answer: (A)

Verified step by step guidance

1. Understand the concept of inventory systems: Inventory systems are methods used by businesses to track and manage their stock. The main types include periodic inventory system, perpetual inventory system, consignment inventory system, and just-in-time inventory system.
2. Define the periodic inventory system: This system requires businesses to physically count their inventory at specific intervals, such as monthly, quarterly, or annually. It does not continuously track inventory levels.
3. Compare with the perpetual inventory system: The perpetual inventory system continuously updates inventory records after each transaction, eliminating the need for periodic physical counts.
4. Consider the consignment inventory system: In this system, inventory is owned by one party but stored and sold by another. Physical counts may be required, but this is not the defining feature of the system.
5. Evaluate the just-in-time inventory system: This system minimizes inventory levels by ordering goods only as needed for production or sales. It focuses on efficiency rather than periodic physical counts.