Abstract: A sensor based inventory management system and method is disclosed. In one embodiment, a method of real time inventory management includes providing a communication backbone between an inventory system and an inventory management server. The method also includes communicating a signal generated by a sensor unit of a sensor based inventory bin of the inventory system to the inventory management server through an interface. In addition, the method also includes determining a quantity of an inventory item in the sensor based inventory bin by processing the signal using an algorithm through a processor of the inventory management server. The method also includes communicating a request to a supplier for updating the quantity of the inventory item in the sensor based inventory bin of the inventory system. The method further includes updating the quantity of the inventory item in the sensor based inventory bin of the inventory system.