Demand management seeks to ensure that demand is as smooth as possible in order to satisfy supply chain operations. Customer demand is subject to peaks and troughs or volatility which increases the supply chain costs. This becomes the challenge for logistics and supply chain managers, as it requires to know almost precisely the amount of inventory requirement in order to meet such demand volatility.

Based on the above, you are required to analyse the following questions:

(a)What are the aims of Effective inventory management?

(b)Why do Logistics managers keep inventories?

(c) What are the risks involved in holding inventories for long period of time?