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MEANING Perpetual Inventory System :- Perpetual Inventory System is a method in accounting for calculating inventory Immediately after the sale and purchase with the use of computerized point-of-sale systems and enterprise asset management. In simpler terms, such a system tracks the inventory in real-time, i.e., after each transaction. ADVANTAGES OF PERPETUAL INVENTORY SYSTEM Economic Order Quantity (EOQ) Alerts on the products that are about to go out of stock Helps businesses to understand customer preferences Helos business owners to set up the inventory management system for various locations, Boost accuracy as inventory items is sorted daily. It helps business owners to understand and frame policies across purchases discounts, and returns Perpetual inventory system also reduces the physical nventory counts Use of a perpetual system allows the company to go for economic order quantity (EOQ) to purchase inventory. EOQ help managers decide when to buy inventory as it considers the cost to hold inventory and cost to order inventory. Economic order quantity (EOQ) is the ideal order quantity a company should purchase for its inventory given a set cost of production, a certain demand rate and other variables. This is done to minimize inventory holding costs and order related costs Calculating the weighted average cost When using the weighted average method, you divide the cost of goods available for sale by the number of units available for sale, which yields the weighted average cost per unit. In this calculation, the cost of goods available for sale is the sum of beginning inventory and net purchases. This weighted average figure is then used to assign a cost to both ending Inventory and the COGS

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