Inventory management is extremely important from a farmers perspective, as it enables them to address various important issues like fluctuation in demand over a period of time. To avoid loss, farmers maintain quality of dry chilly by storing it in cold storage and wait for the right time to sell at a profitable time. Therefore maintaining inventory in such a form which helps him to access market quickly, profitably with quality is a challenge. Therefore this research brings out the farmers knowledge of loss and reasons for the choice of cold storage, grading, drying and packing dry chilly inventory. Exploratory factor analysis is being used in this research to understand the drily inventory management by farmers.