What are the two main types of inventory systems used in distribution centers?

The correct answer highlights the two main inventory systems widely acknowledged in distribution centers: perpetual and periodic inventory systems.

Perpetual inventory systems continuously track the quantity of inventory on hand. Each addition or removal of stock is immediately reflected in the inventory records, allowing for real-time data on inventory levels. This real-time tracking offers numerous advantages, including better control of stock levels, the ability to respond quickly to changes in demand, and minimizing stockouts and overstock situations.

On the other hand, periodic inventory systems involve taking stock at specific intervals (e.g., weekly, monthly, annually). Inventory levels are updated only at these set periods, and the records do not reflect real-time data. While this method is simpler and can be cost-effective for smaller operations with limited complexity, it may lead to inaccuracies between physical counts since businesses do not have immediate insight into inventory levels.

Understanding these two systems is critical for efficient inventory management in a distribution center, as they influence how businesses monitor, replenish, and control their stock.