Modern techniques for managing pharmacy inventories are described. Pharmacists should rely on modern techniques, such as sort-based and activity-based analyses, for managing pharmacy inventories, containing drug costs, performing replacement-and-elimination analysis, and monitoring the health system’s operations. Unit price and quantity are the two basic inventory-control approaches; however, modern techniques recognize quantity as the more useful of the two. The primary areas of the pharmacy’s activities must be taken into consideration. Pharmacists must learn to divide inventory analysis problems into sets of smaller issues. Modern inventory analyses that take into account annual quantity, unit price, total annual cost, and the health system’s unique activities provide the pharmacist with a practical basis for inventory management.