What techniques are used for inventory management?

Question

Accepted Answer

Effective inventory management techniques optimize stock levels, reduce costs, and improve service delivery.

Just-In-Time (JIT): Reduces inventory holding costs by receiving goods only as needed. Example: Toyota's production system.
ABC Analysis: Categorizes inventory into three classes (A, B, C) based on value and turnover rate. Example: Class A items are high-value, low-quantity.
Economic Order Quantity (EOQ): Calculates the optimal order quantity to minimize total inventory costs. Example: A business determines EOQ to balance ordering and holding costs.
First-In, First-Out (FIFO): Ensures older stock is sold first to prevent obsolescence. Example: Grocery stores use FIFO for perishable goods.
Safety Stock: Maintains extra inventory to prevent stockouts during demand fluctuations. Example: A retailer keeps safety stock during holiday seasons.

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