inventory theory

Inventory theory is a field that studies how businesses manage their stock of products or materials. It focuses on determining the right amount of inventory to hold—enough to meet customer demand without overstocking, which can tie up money and storage space. The theory uses models and calculations to balance the costs of ordering, holding, and running out of stock. Effective inventory management ensures products are available when needed, minimizes waste, and maximizes efficiency, helping businesses serve customers well while controlling expenses.