The correct answer is: D. Perpetual Inventory System
A perpetual inventory system is a system of inventory management in which a company keeps a continuous record of its inventory levels. This is in contrast to a periodic inventory system, in which a company only takes physical counts of its inventory at regular intervals.
A perpetual inventory system has several advantages over a periodic inventory system. First, it allows a company to track its inventory levels more closely, which can help to prevent stockouts and overstocks. Second, it can help a company to identify slow-moving and obsolete inventory, which can be disposed of or sold at a discount. Third, it can help a company to improve its cash flow by reducing the amount of time it takes to pay suppliers.
One of the main benefits of a perpetual inventory system is that it obviates the necessity for the physical checking of all items of stores at the end of the year. This can save a company a significant amount of time and money. Additionally, a perpetual inventory system can help to avoid dislocation of production by ensuring that the right materials are always available when they are needed.
ABC analysis, VED analysis, and JIT inventory systems are all inventory management systems that can be used to improve efficiency and reduce costs. However, they do not have the same benefits as a perpetual inventory system in terms of obviating the necessity for physical checking of inventory and avoiding dislocation of production.
ABC analysis is a method of classifying inventory items based on their value. The most valuable items are classified as A items, the least valuable items are classified as C items, and the items in between are classified as B items. This allows a company to focus its attention on the most important items and to reduce the amount of time and money spent on managing less important items.
VED analysis is a method of classifying inventory items based on their value, urgency, and criticality. The most valuable, urgent, and critical items are classified as A items, the least valuable, urgent, and critical items are classified as C items, and the items in between are classified as B items. This allows a company to prioritize its inventory items and to ensure that the most important items are always available when they are needed.
JIT inventory system is a method of inventory management in which a company only orders inventory when it is needed. This can help to reduce costs by reducing the amount of inventory that a company needs to carry. However, it can also lead to stockouts if a company does not accurately forecast its demand.
In conclusion, the correct answer to the question is: D. Perpetual Inventory System. A perpetual inventory system is a system of inventory management in which a company keeps a continuous record of its inventory levels. This has several advantages over a periodic inventory system, including the ability to track inventory levels more closely, identify slow-moving and obsolete inventory, and improve cash flow. Additionally, a perpetual inventory system can help to avoid dislocation of production by ensuring that the right materials are always available when they are needed.