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Inventory represents a significant investment of capital for most companies. Inventory ties up money that could be used more productively elsewhere. Thus, effective inventory management offers the potential for significant cost savings. Furthermore, quality, product engineering, prices, overtime, excess capacity, ability to respond to customers (due-date performance), lead times, and overall profitability are all affected by inventory levels. There are many ways to manage inventory costs, including the EOQ model, JIT, and the theory of constraints (TOC). All three methods offer ways of reducing inventory costs. The best approach usually depends on the nature of the organization as well as the nature of the inventory itself. Describing how inventory policy can be used to reduce costs and help organizations strengthen their competitive position is the main purpose of this chapter. First, we review just-in-case inventory management—a traditional inventory model based on anticipated demand. Learning the basics of this model and its underlying conceptual foundation will help us understand where it can still be appropriately applied. Understanding just-in-case inventory management also provides the necessary