Inventories are a major component of any logistics system and as such require to be planned, managed and controlled in order to achieve the basic aims of:
1)Minimising costs at acceptable levels of investment; 2) Providing the desired levels of customer service.
Their purpose includes: 1) The decoupling of supply and demand through the creation of buffer stocks; 2)The build up of anticipation stocks to meet planned
or expected demand. Inventory management needs to recognise it cannot work in isolation within the logistics system. It can have a significant effect, through
the inventory policies it employs, on many of the inter-related activities, for example; distribution networks, warehouse design and operation, inward and outward bound transport, and should be capable of identifying these areas of cost trade-off which will optimise the efficiency of the total operation.