How does uncertainty affect Inventory Management? Explain any one model of Inventory Management under the condition of uncertainty.

Uncertainty plays a crucial role in shaping inventory management strategies, especially in the context of working capital management. Businesses frequently face unpredictable demand patterns, supply chain disruptions, and fluctuating lead times, all of which contribute to heightened uncertainty. The impact of this uncertainty on inventory management can be far-reaching, affecting both the costs and the effectiveness of maintaining an optimal level of inventory. A primary challenge is balancing the costs associated with holding too much inventory (which increases storage and obsolescence risks) against the costs of stockouts (which may result in missed sales, production delays, or customer dissatisfaction). Effective inventory management is, therefore, closely tied to working capital optimization, and uncertainty magnifies the complexity of this task.

When uncertainty is present, the traditional methods of inventory management, such as fixed-order quantity or fixed-order period models, may need to be adapted. One key issue is that firms may not be able to predict demand or ____ __________ ___ _____ ____.
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