A system and method for tracking articles and controlling inventory thereof on a real time basis comprising the use of a tag assembly including a plurality of tags including both active tags and passive tags distinguishable from one another by the provision of a self contained power source in the active tags. One or more readers are disposed within a locale being monitored and are structured to communicate received data transmission from a host controller, for additional administrative processing in terms of determining the existence, location and/or movement of various articles with which the plurality of tags are directly associated. Depending on their category the tags may be activated by either entering an electric field of a predetermined first frequency or by receiving an activation signal from the reader assembly also transmitted at the first predetermined frequency. Communication between the tags and the reader occurs at a second frequency being different from the first frequency.