Which type of inventory technique uses set levels to trigger reorder of stock?

The minimum and maximum inventory technique is a systematic approach that helps manage stock levels effectively by establishing predefined thresholds for inventory. When inventory levels drop to the set minimum level, it signals the need to reorder stock, ensuring that a sufficient amount is maintained to meet demand without overstocking.

This method is vital for preventing stockouts, which can lead to lost sales, as well as for minimizing holding costs associated with excess inventory. By setting both minimum and maximum levels, this technique provides a structured way to maintain an optimal inventory balance, allowing businesses to operate smoothly with consistent supply.

The other techniques, while useful in different contexts, do not specifically rely on these minimum and maximum thresholds. Periodic inventory focuses on assessing stock levels at regular intervals rather than setting specific reorder points. ABC analysis categorizes inventory based on value and importance but does not involve fixed levels for reordering. Perpetual inventory maintains real-time tracking of inventory but does not inherently include the concept of minimum and maximum thresholds to trigger reorders.