In supply chain and inventory management, a quota is a set limit or target on the volume of goods to be produced, purchased, or sold within a specific timeframe. Quotas are often used to control inventory levels, manage supplier capacity, or align production with strategic goals. For example, suppliers may have monthly quotas to avoid overproduction, while buyers might set purchase quotas to prevent excessive stock accumulation.Managing quotas effectively requires accurate demand forecasting and close coordination with suppliers and production teams. Misaligned quotas can cause inventory imbalances—either shortages that lead to stockouts or surpluses that increase carrying costs. Organizations often use quota systems in conjunction with performance monitoring to adjust targets dynamically and maintain optimal inventory levels.
