The key to managing inventory is to balance the costs and benefits of carrying larger inventories with the costs and benefits of holding less.

Question

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Managing inventory involves finding the optimal balance between the costs of holding too much inventory (such as storage space, insurance, and potential obsolescence) and the costs of running out of inventory (such as lost sales, longer lead times, and unhappy customers). This requires careful analysis, forecasting, and planning to ensure that inventory levels are neither too high nor too low.

The Key to Managing Inventory Is to Balance the Costs