In the retail industry, inventory has a significant effect on cash flow. The leaner you run, the less problems you will have with cash. 

Typically, the best way to predict your inventory needs I'd to look at past history. Did you end a season with unsold goods? If you did, adjust your purchases down. Inventory carrying costs are also risky. Obsolete or damaged goods will never be converted to cash unless you mark them down and move them out.