Rob Carson is concerned about theft by shoplifters in his chain of three discount stores and has come to your public accounting firm for advice. Specifically, he has several questions he would like you to answer:
a. He wonders if there is any inventory system he can use that will allow him to keep track of products that leave his stores as legitimate sales and will also allow him to determine if inventory has been lost or stolen.
b. He realizes that carrying inventory is expensive. He wants to know if you have any suggestions as to how he can keep close tabs on his inventory at the three stores so he can be sure that the stores don’t run out of product or have too much on hand.
c. The space in the stores is limited. Rob wants to install an inventory system that will tell him when a product is slow-moving or obsolete so he can clear it out and replace it with a potentially faster moving product.
Required
Indicate whether a perpetual inventory system or a periodic inventory system will provide Rob with answers to the three questions he has asked. Explain how the inventory system indicated will provide the specific information he has requested.
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