What is the primary purpose of conducting inventory?

The primary purpose of conducting inventory is to track usage and quantity of items. This process allows a business to keep a precise account of what inventory they have on hand, what has been sold, and what needs to be reordered. By monitoring inventory levels, a business can manage stock more effectively, minimize wastage, and ensure they meet customer demand without running into stock shortages. This practice directly impacts operational efficiency, financial planning, and can influence pricing and promotional strategies based on current inventory levels.

Other options revolve around different aspects of business operations. Determining employee performance and calculating employee wages relates to human resources rather than inventory management. Assessing vendor relationships is important for supply chain management but does not directly involve the actual tracking of inventory items. Understanding the significance of inventory tracking is essential for maintaining a profitable and streamlined operation.