Hospitals must balance the high cost of holding inventory against the risk of stockouts. Two primary models are used:

• Just-In-Time (JIT): Products are delivered exactly when needed. This minimizes storage costs but leaves the hospital vulnerable to transport delays or manufacturing shortages.

• Safety Stock (S-S): Maintaining extra buffer inventory for critical items like oxygen, PPE, or life-saving cardiac stents.

Advanced facilities use ABC Analysis, categorizing items by value and volume to determine which items require the strictest control versus those that can be managed with less oversight.