Which inventory method helps in maintaining optimal supply levels?

The just-in-time inventory management approach is designed to align inventory levels with actual usage and demand, minimizing excess stock while ensuring that supplies are available when needed. This method optimizes supply levels by reducing storage costs and waste, as it involves ordering products just before they are needed in the production or service process. As a result, organizations can maintain a lean inventory, responding quickly to changes in demand without the burden of excess materials or stockpiling.

In contrast, other inventory methods such as FIFO, the periodic review system, and safety stock management might not focus solely on aligning inventory quantities with current demand. FIFO ensures that products are used or sold in the order they were received, which is vital for perishable goods but does not necessarily lead to optimal supply levels. The periodic review system assesses inventory at set intervals and may not react quickly to variations in demand. Safety stock management is aimed at safeguarding against stockouts but generally involves maintaining extra inventory as a cushion, which might lead to higher levels than what is needed for optimal operations.