To reduce the total cost of inventory, the most common approach to deciding how much to order to replenish inventory is called the economic order quantity (EOQ) approach. This approach attempts to find the best balance between the advantages and disadvantages of holding inventory.

This approach aims to minimize the total cost of inventory, which includes the following costs: 

- Working capital costs.

- Storage costs.

- Obsolescence risk costs. 

- Cost of placing the order.

- Price discount costs.

Summary:

Inventory costs can be reduced by applying the economic order quantity (EOQ) method. This helps the company reduce inventory costs while maintaining the desired customer service level.