A perpetual inventory system would be used by a(n)
a.automobile dealership.
b.hardware store.
c.drugstore.
d.convenience store.
The correct answer and explanation is :
The correct answer is:
c. Drugstore
Explanation
A perpetual inventory system is an inventory management method where inventory records are updated in real-time as sales and purchases occur. This system ensures that inventory levels are continuously monitored and always up to date. Businesses that sell high-volume, fast-moving, and relatively high-cost items typically use a perpetual inventory system.
Why a Drugstore Uses a Perpetual Inventory System
- Frequent Inventory Changes
Drugstores deal with a wide variety of products, including prescription medications, over-the-counter drugs, personal care items, and other health-related products. Many of these items are in high demand and require continuous stock updates. - Regulatory Compliance
The pharmaceutical industry is highly regulated. Many medications have expiration dates, and certain controlled substances must be tracked meticulously. A perpetual inventory system allows real-time monitoring of stock levels to ensure compliance with legal regulations. - Integration with POS Systems
Most drugstores use point-of-sale (POS) systems that integrate with perpetual inventory tracking. Every time an item is sold, the inventory is automatically updated, reducing the risk of stockouts or overstocking. - Efficient Reordering
Because inventory levels are always current, drugstores can set up automatic reordering for essential medicines and health products, ensuring they never run out of stock. This helps in maintaining customer satisfaction and avoiding revenue losses.
Why Not the Other Options?
- Automobile Dealership – Uses a periodic inventory system since car sales are infrequent and each vehicle is tracked individually.
- Hardware Store – May use a combination of both systems but often relies on periodic inventory due to varied stock.
- Convenience Store – Uses a periodic system as most products are low-cost, fast-moving, and not highly regulated.
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