Inventories are items that a company uses in its production process or has for sale in the ordinary course of business. The term can also refer to the value of these items, i.e., the cost of goods sold plus the cost of inventory.
Inventory management is the process of tracking and controlling inventory levels. This can involve setting minimum and maximum stock levels, ordering inventory, and keeping track of inventory levels.
Inventory management is important for businesses because it helps to ensure that they have enough inventory on hand to meet customer demand, while also avoiding excess inventory that can tie up working capital.