The primary goal of inventory management is to minimize the:
A)number of orders per year.
B)average inventory level.
C)total costs of holding inventory.
D)level of inventory for the most expensive items.
E)total opportunity costs.

Question

The primary goal of inventory management is to minimize the:
A)number of orders per year. 
B)average inventory level.
C)total costs of holding inventory.
D)level of inventory for the most expensive items.
E)total opportunity costs.

Quizplus · Accepted Answer

The primary goal of inventory management is to minimize the total costs of holding inventory, which includes the costs of storing, handling, and maintaining inventory as well as the opportunity costs of tying up capital in inventory. While minimizing the number of orders per year and average inventory level may be secondary goals, they ultimately contribute to the primary goal of reducing inventory costs. The level of inventory for the most expensive items may be important, but it is not the primary goal of inventory management. Total opportunity costs are already included in the total costs of holding inventory.

The Primary Goal of Inventory Management Is to Minimize The