11 Most Common Inventory Management Terms

Inventory Management Terms

If you’re thinking of starting a retail or restaurant establishment, then you should know that inventory management will determine whether you succeed or fail. So it’s important to acquaint yourself with its ins and outs. The first thing you should familiarize yourself with when looking to manage inventory properly is inventory terms. And if you want to get an in-depth insight into inventory management, then you must want to know these terms and where they apply. Here are a few common terms you’ll come across in the inventory management niche:

Common inventory management terms: Available stock

The quantity of inventory available for sale

Common inventory management terms: Backorder

This term relates to out-of-stock items. It merely means the ability for a business owner or the person responsible for inventory to place and track the order, which is out-of-stock temporarily.

Common inventory management terms: Bundles

This refers to a mix of different related products. For instance, many retail business owners bundle and sell winter gloves, scarf, and hat.

Common inventory management terms: Dropshipping

This is a form of order fulfillment where a business owner places a customer order and instructs that it be shipped directly to the customers. It’s a smart way business owners cut back on shipping and delivery costs.

Common inventory management terms: Electronic data interchange (EDI)

This is a technique that enables one business to send data to another business electronically, instead of with paper. And this brings us to an inventory management term called trading partner, which refers to businesses that do business electronically.

Common inventory management terms: Evergreen item

These are stock items that are always in demand. They are sometimes called basics.

Common inventory management terms: Flash sale

This is the sale of products at rock-bottom prices. Short sales only last a short period.

Common inventory management terms: Forecasting

Forecasting is the use of past data to determine future occurrences or trends

Common inventory management terms: Inflated stock

Inflated stock refers to a high number of stock items. This usually happens because of errors in stock taking or receiving stock items incorrectly.

Common inventory management terms: Inventory on hand

This is the amount of stock physically present in the warehouse

Common inventory management terms: Inventory turnover

The rate at which a particular stock item is sold and replaced


Well, there are many terms related to inventory management you should know. This is barely a scratch on the surface. However, they are the most commonly used terms and could help you understand the basics of inventory management.

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