The inventory system is in charge of distributing and handling the b2b inventory cycle. Before they are transformed into a finished product, raw materials may be transported thousands of kilometers. These inventories are used to separate the supplier, producer, and customer.

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October 4, 2022 by admin DeadStock 187Views 0Comments
Difference between pandqinventory
Systems

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Orderingthe appropriate quantityofitems for your companytofulfill client demands maybe
challenging. Because orderingtoomuch or toolittle inventorymight lose your moneyand
consumers.As aresult,it is critical tounderstandwhich inventorymanagement system relates to
which divisions ofyour company.
Please readthis article tolearn about the PandQinventorysystem andits distinctions.
What is thePandQsystemof inventory
management?
The inventorysystem is in charge ofdistributingandhandlingthe b2binventorycycle. Before
theyare transformedintoafinishedproduct,rawmaterials maybe transportedthousands of
kilometers.These inventories are usedtoseparate the supplier,producer,andcustomer.
Inventories enable the acquisition ofrawmaterials in cheaplot sizes andthe processingofraw
materials intofinisheditems in the most cost-effective proportions.
The inventory model there are twotypes of inventory models;
single-periodinventorymodel
multi-periodinventorymodel
The multi-periodinventorymodel has twodifferent inventorymodels:the fixedorder quantity
model andthe fixedperiodmodel.The fixedorder quantitymodel is alsoknown as the Qmodel,
andthe fixedperiodmodel is known as the Pmodel.
Qmodel in inventory
Let’s start with the fixedorder quantitymodel. In this model/system,afixedquantityofmaterial
is orderedwhenever the stock on handreaches the reorder point.The fixedquantityis the
economicorder quantitywhich is howmuch toorder.
There are twodifferent types of Qmodels.
1. Qmodel with safetystock.
2. Qmodel without safetystock.

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There are three levels in afixedorder with safetystock:maximum,reorder,andminimum. Below
the minimum level,there is asafetystock,sowhenever the inventoryreaches the minimum level,
it must be reordered.Accordingtothe fixedorder quantitymodel,there is always asafetystock
maintainedin this model.
Another one is the fixedorder quantitymodel without safetystock.There are three levels:
maximum,reorder,andminimum. Nosafetystock is maintained,sowhenever inventoryreaches
the minimum level,that is calledthe reorder point. In this model,inventorydecreases at a
constant rate.
Example
The automaticcheckout system with alaser scanner usedbymanysupermarkets andretail
organizations is amore advancedexample ofthe Qsystem.The laser scanners readthe product
package’s universal product code (UPC)or barcode.
The inventorylevel will be instantlyrecordedandupdatedbythe system.Asystem ofthis type is
quick andprecise. Still,it alsooffers management continuallyupdateddataon the state ofits
stock levels.
Pros
Each resource maybe obtainedin the most cost-effective quantity.
Purchasingandinventorymanagers automaticallydirect their attention toproducts that
are necessaryonlywhen theyare required.
Bycalculatingthe specifiedmaximum andminimum values,we can positivelycontrol by
effectivelymanagingtokeepinventoryinvestment at the correct level.
Cons
Because the reorder points occur randomly,the objects cannot be groupedandsorted
simultaneously.
P-model
In afixedperiodsystem (Pmodel ),inventoryis countedonlyat aparticular time,such as every
week or everymonth. Countinginventoryor placingorders periodicallyare desirable when

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vendors visit customers andtake orders for their complete line ofproducts.
In this model,the stock position ofeach item is regularlyreviewedwhen the stock level ofagiven
item is sufficient tosustain production operations when an order is placedin the next review.
Pros
Orderingandstockingexpenditures are minimal.The orderingcost is significantly
decreased,yet more effort for each deliverymaybe required.
As sales are certain,the suppliers will likewise give substantial discounts.
Cons
The periodictestingmethodincreases purchase activityaroundreviewdays.
In the interest ofadministrative efficiency,the system requires developingrigidorder
amounts.
P-systeminventory example
The pharmacyis one example ofacompanythat employs afixed-periodinventorysystem.
Shampoo,toothbrushes,soap,bandages,cough medication,andaspirin are amongthe personal
hygiene andhealth-relatedgoods soldat drugstores.
Typically,the vendors whosupplythese things tothe business will take frequent visits,such as
everyfewweeks or everymonth,tocount the inventoryfor their products. Suppose the inventory
is depletedor reaches apredefinedreorder threshold. In that case,aneworder will be issuedfor
an amount sufficient toreplenish the inventorytothe desiredlevel.
Drugstore managers will often not monitor inventorylevels between vendors’visits,instead
relyingon the vendors totake inventoryat the time ofthe visit.
Differencebetween QandPinventory systems
Pinventory system Qinventory system
The inventoryis basedon afixedreview
period
The inventoryin the Qsystem reaches to
re-order time

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Pinventory system Qinventory system
The recordin the Psystem is reservedat
the reviewpoint
The recordin the Qsystem is constant
The order amount in Psystem fluctuates
The order amount in Qsystem is
constant
The maintenance in Psystem is lesser The maintenance in Qsystem is higher
Final Verdict
An inventorysystem simplifies the organizational structure andoperatingprinciples for
managingandcontrollingthe inventorycycle.This system is in charge oforderingandreceiving
supplies,schedulingorder placement,andtrackingwhat was ordered,howmuch was ordered,
andwhoplacedthe order.
Firms commonlyutilize the PandQinventorymanagement system toorder digital inventory.
Each inventorysystem has advantages anddisadvantages that youshouldevaluate before
selectingone for your firm. When your organization implements the proper inventorysystem,
youwill see asignificant enhancement in your inventoryandbusiness position.
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