What is the goal of inventory management?

• A. To maximize warehouse space usage regardless of demand.
• B. Balancing stock levels to meet demand while minimizing costs; techniques include EOQ, JIT, safety stock.
• C. To keep inventory levels always high to avoid stockouts.
• D. To eliminate all inventory to reduce costs.

Answer: (B)

Inventory management centers on keeping the right amount of stock at the right time to satisfy customers while controlling costs. The goal is balancing stock levels to meet demand while minimizing costs, using techniques like Economic Order Quantity to choose an optimal order size, Just-In-Time to reduce holding costs by receiving items as needed, and safety stock to cushion against variability. This approach ensures you can fulfill orders promptly without tying up excessive capital in inventory. In contrast, trying to maximize warehouse space without regard to demand wastes resources, keeping inventory levels continually high inflates carrying costs, and eliminating all inventory would lead to frequent stockouts and lost sales.