Determining optimal inventory levels involves several strategies and tools:
Economic Order Quantity (EOQ): This formula helps in determining the ideal order quantity that minimizes total inventory costs, including ordering and holding costs. Just-In-Time (JIT): This inventory strategy aims to reduce holding costs by receiving goods only as they are needed in the production process. ABC Analysis: This method categorizes inventory into three categories (A, B, and C) based on their importance and value, allowing businesses to focus on the most critical items.