27 Inventory Management Terms and Definitions You Must Know

Understanding key inventory management terms is crucial for successful inventory management. Here are 27 must-know terms.

Jonny Parker
January 22, 2024

There are a variety of inventory management terms, like safety stock and economic order quantity, that businesses need to comprehend to manage inventory successfully. 

Understanding these concepts can benefit your business in several ways:

  1. Effective communication. Everyone in your warehouse can communicate with one another clearly without any confusion.
  2. Optimizing inventory levels. You can optimize inventory levels by implementing strategies like reorder points and safety stock.
  3. Cost controls. Grasping terms like economic order quantity can help you reduce holding and ordering costs.
  4. Better decision-making. You can make strategic and data-driven decisions like when and how much to order.
  5. Better risk management. Incorporating key concepts like safety stock and lead time into inventory management practices helps you better manage the risks associated with supply chain disruptions and other unforeseen events.

To enhance your proficiency in inventory management, h