Inventory management

Definition

Inventory management is the process of ordering, storing, using, and selling a company's inventory. It includes the management of raw materials, components, and finished products, as well as warehousing and processing such items.

Related terms

Supply Chain Management: The oversight of materials, information, and finances as they move from supplier to manufacturer to wholesaler to retailer to consumer.

Just: In-Time (JIT) Inventory - A strategy that aligns raw-material orders from suppliers directly with production schedules to reduce warehouse space and costs by receiving goods only as they are needed in the production process.

Economic Order Quantity (EOQ): A formula used by companies to determine the optimal order quantity that minimizes total inventory costs including holding, ordering, and shortage costs