In his immensely interesting book Basic Economics, storyteller, humorist, photographer, libertarian economist, and Hoover Institution Fellow Thomas Sowell makes an interesting and succinct observation about inventory: Inventory is a substitute for knowledge.
There are many misconceptions about Lean (and mass production, too) that can be cleared up by giving some serious thought to the meaning of this assertion.
As a general rule, the knowledge that is most important to maintaining proper levels of inventory is knowledge of the rate of customer demand — how much stuff your customers will buy or consume in a given time.
Knowing the rate of customer demand allows us to keep enough inventory on hand to meet peak demands, with but a small margin remaining to allow for our lack of complete knowledge about the rate of customer demand.