When a purchase order is created, the system checks the inventory levels for the items in the order. If the items are in stock, the inventory is reduced accordingly. If not, the system may trigger a backorder process or notify the procurement team to restock. Citation: Inventory Management Module, Section 3.1

Average cost is calculated by taking the total cost of all inventory purchases and dividing it by the total number of units purchased. Citation: Inventory Management Module, Section 4.2.