Poor management of inventory creates a severe risk for organizations, most especially when the volume of inventory and the frequency of inventory movement is high. The perpetual inventory system and the periodic inventory system are the typical approaches used by business organizations to account for their inventory level.

REQUIRED:

Discuss the appropriate inventory management approach assuming that;

(a) The volume of inventory and the frequency of inventory movement is high. (4.5 Marks)

(b) The volume of inventory and the frequency of inventory movement is low. (4.5 Marks)