Which description characterizes a pull-based inventory system?

Which description characterizes a pull-based inventory system?

• A. Materials are replenished according to a fixed schedule.
• B. Inventory is kept at maximum levels at all times.
• C. Materials are replenished in response to actual consumption.
• D. Orders are placed at the start of each quarter regardless of demand.

Answer: (C)

A pull-based inventory system replenishes stock in response to actual consumption rather than on a preset schedule. The essential idea is to react to real usage signals—when materials are consumed or an inventory level drops to a trigger point—a replenishment order is issued. This keeps inventory lean, reduces carrying costs, and helps ensure materials arrive just as they’re needed for production or sales, aligning supply with demand. Describing replenishment on a fixed schedule reflects a push approach, where forecasts and calendars drive when orders are placed regardless of current consumption. Keeping inventory at maximum levels aims to guard against stockouts but isn’t driven by actual usage signals. Ordering at the start of each quarter regardless of demand is another calendar-driven, push-style method, not responsive to real consumption.

A pull-based inventory system replenishes stock in response to actual consumption rather than on a preset schedule. The essential idea is to react to real usage signals—when materials are consumed or an inventory level drops to a trigger point—a replenishment order is issued. This keeps inventory lean, reduces carrying costs, and helps ensure materials arrive just as they’re needed for production or sales, aligning supply with demand.

Describing replenishment on a fixed schedule reflects a push approach, where forecasts and calendars drive when orders are placed regardless of current consumption. Keeping inventory at maximum levels aims to guard against stockouts but isn’t driven by actual usage signals. Ordering at the start of each quarter regardless of demand is another calendar-driven, push-style method, not responsive to real consumption.