Final answer:
Inventory management is crucial for maintaining an optimal balance of stock within limited storage spaces, employing strategies such as JIT and FIFO to prevent overstocking and stockouts.
Step-by-step explanation:
The management of inventory is essential in ensuring that sufficient stock is available to meet demand without exceeding the constraints of limited storage space. Effective inventory management involves the use of various strategies such as just-in-time (JIT), which reduces the volume of inventory that a company holds at any given time, and first in, first out (FIFO), which ensures that the oldest stock is used or sold first. This process is critical for companies as it helps maintain a delicate balance between too much and too little inventory, avoiding overstocking and stockouts, which can both be costly to businesses.