Inventory Methodology is the process of managing and accounting for your business’s raw materials, work-in-process items, finished goods and related inventory items. It involves a variety of steps, such as accurately tracking items, categorizing them in an organized manner, and utilizing various tools to monitor inventory levels. By developing an effective inventory methodology, businesses can ensure that they have enough stock to meet customer demand without having too much stock on hand, which can be costly. When done correctly, inventory methodology enhances efficiency, reduces costs and increases profits.