What is the primary function of inventory management?

• A. Forecast demand only.
• B. The function of planning and controlling inventories; goal is to help a company be more profitable by lowering cost of goods sold and/or increasing sales.
• C. To maximize inventory turnover at all times regardless of service levels.
• D. To minimize supplier relationships.

Answer: (B)

The fundamental purpose of inventory management is to plan and control inventories so the company improves profitability. This means keeping the right amount of stock to meet demand without overstocking or stockouts, which lowers total costs (like carrying and ordering costs) and/or improves sales by ensuring products are available when customers want them.

In practice, this involves forecasting demand, setting reorder points and safety stock, determining order quantities, and coordinating with suppliers to balance costs and service levels. If you push for high turnover alone without regard to service, you can incur stockouts and lost sales. And if you shrink supplier relationships or overemphasize one metric at the expense of others, you miss the broader goal of efficient, reliable operations that support profitability.