We analyze whether a risk management motive, besides technological and organizational changes, can explain the observed dynamics of cash holdings and storage for U.S. corporations in the last half-century. We calibrate a dynamic structural model to examine the role of inventory in risk management, alongside derivatives and cash holdings. We find that inventory management creates more value as an operational hedge than as a reserve of liquidity. Most importantly, procyclicality of inventory returns, together with external finance costs and higher cash flow risk, explains the negative correlation between inventory and cash ratios, in the cross-section of firms in the same industry