Inventory management is primarily about specifying the shape and percentage of stocked goods
Inventory management leads to optimal inventory levels.
Management of the inventories, with the primary objective of determining/controlling stock levels within the physical distribution system, functions to balance the need for product availability against the need for minimizing stock holding and handling costs.
Inventory management can also help companies improve cash flows.
“Inventory management refers mainly when a firm strives to attain & uphold an optimal inventory of goods while also taking note of all orders, shipping, handling, & other associated costs”.
Inventory management is mainly about identifying the amount and the position of the goods that a firm has in their inventory. Inventory management is imperative as it helps to defend the intended course of production against the chance of running out of important materials or goods.
Inventory management also includes making essential connections between the replenishment lead time of goods, asset management, the carrying costs of inventory, future inventory price forecasting, physical inventory, and available space for inventory, demand forecasting and much more.
By balancing these competing requirements, a company will discover their optimal inventory levels. This is an ongoing process, as the firm will need to shift and adjust as it changes and expands.