Which inventory control method focuses on managing inventory levels based on demand fluctuations?

The Just-in-Time (JIT) inventory control method is designed to manage inventory levels in alignment with actual demand rather than relying on forecasts. This approach emphasizes the reduction of excess inventory by aligning production schedules with customer demand, which can lead to lower carrying costs and minimized waste. With JIT, companies aim to receive goods only as they are needed in the production process, thereby reducing the amount of inventory held at any given time. This method requires precise demand forecasting and a tightly coordinated supply chain, enabling organizations to respond effectively to fluctuations in demand.

While FIFO (First-In, First-Out) and Selective inventory management are important methodologies for handling inventory, they do not specifically emphasize responsiveness to demand changes as JIT does. ABC analysis categorizes inventory based on its importance and value rather than directly addressing fluctuations in demand. Therefore, JIT stands out for its proactive approach to managing inventory in response to demand variability, making it the most fitting choice for this question.