Optimal Inventory Management Strategy

Hard Working Capital Management Inventory Management

A retail company is assessing its working capital management strategies, particularly focusing on inventory management. The company sells various products with different demand patterns and holds different amounts of inventory. The inventory turnover ratio is a vital metric in determining how many times inventory is sold and replaced over a period. The company aims to optimize its inventory levels to reduce costs while maintaining customer satisfaction.

Suppose the company is considering three different strategies to manage its inventory more effectively:

Maintain a just-in-time (JIT) inventory system to minimize holding costs.

Increase safety stock levels to ensure product availability.

Implement a first-in, first-out (FIFO) inventory method to maximize profits.

Hint

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