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This study examines the inventory management (IM) practices, reasons, influencing factors and impact of IM on the performance of micro, small and medium enterprises (MSMEs). Primary data was collected using a survey questionnaire among 40+ MSMEs in Baddi Industrial Area, Himachal Pradesh, India. The study reveals that MSMEs generally follow poor IM practices and non-scientific forecasting methods, leading to capital being tied up due to excess inventory or stockouts, delayed delivery, customer dissatisfaction, reduced profits, operational inefficiencies, and diminished competitiveness. Factors such as limited awareness, lack of access to technology and finances, and a shortage of skilled manpower contribute to inadequate implementation of scientific IM practices. The study establishes that poor IM practices and unscientific forecasting practices have an impact on the inventory cost, which in tun impacts the firm's performance. To address these challenges, the study makes many recommendations. [ABSTRACT FROM AUTHOR]