Which of the following is a key benefit of effective inventory control?

Effective inventory control significantly contributes to a reduction in carrying costs, which encompasses expenses such as storage, handling, insurance, and depreciation of inventory. By maintaining optimal inventory levels, organizations can avoid overstock situations that tie up capital and increase the costs associated with excess inventory. Furthermore, efficient inventory management helps to minimize waste and spoilage, particularly in industries dealing with perishable goods.

In addition, effective inventory control often leads to better forecasting and demand planning, which helps organizations align their inventory with actual market needs rather than speculative stockpiling. This alignment not only reduces costs but also enhances cash flow, allowing businesses to reinvest savings into other critical areas.

In contrast, other options such as increased obsolescence, higher purchasing frequency, and increased lead time indicate inefficiencies in inventory management, which could adversely affect a company's operational performance and financial health. Therefore, the reduction in carrying costs is a primary advantage of practicing effective inventory control.