Inventory planning
Continuous Review System
By the Supply Chain Manager team · Updated October 16, 2026
A continuous review system watches each SKU's stock all the time and places a fixed-size order the moment it falls to the reorder point.
It is also called a fixed-order-quantity or (s, Q) system. The order size stays the same and the timing varies. Because it reacts as soon as stock crosses the trigger, it needs less safety stock than a periodic system for the same service level.
It used to require constant manual checking, which is why it was reserved for the most important items. With live inventory data, software can watch every SKU continuously.
How to calculate continuous review
When Inventory Position ≤ Reorder Point: order a fixed quantity Q (often the EOQ)
Continuous review example
Illustrative numbers: reorder point 252 units, order quantity 450. On Wednesday a large shipment drops inventory position from 300 to 240, so a 450-unit order goes out the same day instead of waiting for Monday's review.
Why continuous review matters for distributors
For fast movers and A-class items, reacting the day stock crosses the line rather than at the next weekly review is often the difference between a near miss and a stockout.
Common continuous review mistakes
- Triggering on on-hand stock and reordering again while a PO is already open.
- Using a fixed quantity that no longer matches current demand.
Examples on this page use made-up round numbers to show the calculation. They are not benchmarks or results from real businesses.