Which practice typically results in lower inventory carrying costs?

Just-in-time inventory management is a strategy focused on minimizing inventory levels and reducing carrying costs. This practice emphasizes ordering inventory only when it is needed in the production process or when there is actual customer demand. By reducing the amount of inventory held at any given time, companies can significantly lower costs associated with storage, insurance, and obsolescence.

In contrast, bulk purchasing typically leads to higher inventory carrying costs because it involves acquiring large quantities of products, which increases the amount of inventory that needs to be stored and managed. Similarly, increasing safety stock results in holding more inventory as a buffer against uncertainties in demand or supply, which also raises carrying costs. Seasonal inventory build-up means maintaining higher levels of stock during peak seasons, leading to excess inventory during off-peak periods, further compounding the carrying costs.

Overall, just-in-time inventory management aims to maintain the leanest inventory possible while minimizing costs, thereby making it the approach that typically results in lower inventory carrying costs.