In the Chartering Story told in class, what type of inventory control system does Ron use?

• A. Perpetual inventory system
• B. Fixed Interval System
• C. Just-in-time system
• D. Economic order quantity system

Answer: (B)

The situation hinges on how and when inventory levels are reviewed and replenished. In a fixed interval (periodic) system, stock is counted and reviewed only at regular, scheduled intervals rather than after every single transaction. Then, at each interval, you determine what to order to bring inventory back up to a desired level for the next period. This approach fits a story where Ron isn’t updating records with every buy or sale but is instead performing planned checks and replenishments on a set timetable.

This contrasts with a perpetual system, where inventory is updated in real time with every transaction, requiring continuous tracking. Just-in-time aims to minimize on-hand inventory almost to zero, which usually needs very reliable suppliers and tight lead times. The economic order quantity concept focuses on calculating an optimal order size, not on how often inventory is reviewed. The narrative emphasis on regular, scheduled counts and replenishment aligns with the fixed interval approach.