4.1 What is inventory management?
Inventory management is the systematic oversight of the quantity, quality and utilisation of ingredients from order to service. It rests on an economic foundation that includes the EOQ model (Economic Order Quantity) – which identifies the most cost-effective order quantity by balancing ordering and holding costs – and the JIT methodology (Just-In-Time), which minimises stock levels through precise delivery timing.
Today these models are commonly integrated into ERP systems that monitor stock levels in real time. ABC analysis is frequently used to classify ingredients: Category A contains the most valuable items requiring frequent counting, Category B intermediate items and Category C less expensive items. Key performance indicators include inventory turnover rate and days of inventory on hand, where a high turnover rate indicates efficiency and reduced capital tied up in stock.