What inventory management technique aims to reduce carrying costs?

The Just in Time (JIT) inventory management technique is designed to minimize carrying costs by ensuring that inventory is received or produced only as needed for the immediate production schedule or sale. This approach significantly reduces the amount of inventory held at any given time, which can lower storage costs, insurance, and the risk of obsolescence.

In JIT, companies strive to have the right amount of inventory on hand at the right time, leading to more efficient inventory management. This methodology also encourages better supplier relationships, as it often requires reliable delivery schedules to maintain consistent manufacturing or sales processes. Consequently, by decreasing the volume of excess stock, organizations can better control and reduce overall inventory costs.

In contrast, methods like FIFO (First In, First Out), LIFO (Last In, First Out), and the weighted average method are primarily focused on how inventory is accounted for rather than on actively reducing carrying costs. They do not inherently promote the reduction of inventory levels or storage expenses in the same way that JIT does.