Perpetual inventory control In a perpetual inventory system, stock levels are monitored continuously and action is triggered as the stock approaches which level?

Introduction / Context:Perpetual inventory control maintains up-to-date records of receipts, issues, and balances, enabling timely replenishment decisions and reducing stockouts or overstocking.

Given Data / Assumptions:

• Transactions are recorded continuously (bin cards or computerized systems).
• Reorder point is based on lead time demand plus safety stock.
• Action levels (max, min, reorder) are defined.

Concept / Approach:Perpetual systems compare the on-hand balance to the reorder point (a form of minimum level). When balance falls to or below this trigger, a purchase order is initiated so that replenishment arrives by the time stock would otherwise run out.

Step-by-Step Solution:Compute reorder point = average demand during lead time + safety stock.Track perpetual balance after each issue/receipt.When balance ≤ reorder point (minimum action level), place an order for EOQ or planned lot size.

Verification / Alternative check:Historical records should show reduced stockouts and balanced carrying costs after implementing reorder point control.

Why Other Options Are Wrong:Maximum and average levels are reference bounds, not the primary trigger; EOQ is an order size, not a stock level; ordering at safety stock regardless of level is inefficient.

Common Pitfalls:Failing to account for lead time variability; inaccurate transaction posting leading to phantom stock or shortages.

Final Answer:Minimum level (reorder point trigger)