Which method defines a minimum and maximum level of inventory to maintain?

• A. Just in Time Method
• B. Open to Buy Method
• C. Min/Max Method
• D. E-Procurement

Answer: (C)

Min/Max is about keeping inventory within an intentional range by setting a lower bound (minimum) that triggers replenishment and an upper bound (maximum) that caps how much you want on hand. When stock falls to the minimum, you place an order to bring it back up to the maximum. This approach helps balance service levels with carrying costs, ensuring you don’t run out of stock while avoiding excess inventory. The minimum is tied to meeting demand during lead time plus a safety buffer, and the maximum defines the target level after replenishment. Other methods don’t establish fixed min and max levels: Just in Time aims for very low or zero safety stock, Open to Buy focuses on budgeting purchases, and E-Procurement automates purchasing rather than setting inventory targets.