Holding inventory ties up cash and incurs storage, insurance, and spoilage costs, but holding too little risks stockouts that lose sales and damage customer trust — effective inventory management balances these competing costs. ABC analysis classifies inventory into three tiers based on value: 'A' items are the small percentage of stock that represents the largest share of value and need tight control, 'B' items are moderate priority, and 'C' items are low-value, high-volume items that need simpler, less intensive management. Just-in-time (JIT) inventory keeps stock levels deliberately low, ordering only what's needed just before it's used, reducing holding costs but increasing vulnerability to supply disruptions, while just-in-case inventory keeps safety stock on hand specifically to buffer against uncertain demand or unreliable supply — a strategy many businesses leaned on more heavily after recent global shipping disruptions exposed the fragility of lean JIT systems.