If a contractor does not want to incur extra costs related to inventory, what should be avoided?

To avoid incurring extra costs related to inventory, the strategy should focus on minimizing unnecessary purchases. Excessive purchasing of materials leads to increased holding costs, which encompass storage expenses, insurance, and potential waste if materials become obsolete or deteriorate. In a construction context, over-purchasing also risks cash flow issues, as funds are tied up in excess inventory rather than being utilized for other necessary expenses.

Contrastingly, regular monitoring of inventory levels is critical for effective inventory management. This practice helps in understanding the actual needs and minimizing over-ordering. Using just-in-time delivery can further mitigate inventory costs, as it allows the contractor to receive materials only as they are needed for projects, reducing the need for storage and minimizing the risk of excess. Storing materials on-site, while sometimes necessary, can also incur costs related to security and space, but is often a practical solution when immediate access to materials is required for ongoing work. Thus, excessive purchasing is the primary action that should be avoided to manage inventory costs effectively.