The heifer enterprise of a modern dairy operation plays a cru­cial role in health and productivity performance, cost of pro­duction and future potential. The variables that determine heifer inventory are nearly innumerable, but at minimum, re­productive performance in the cow and heifer herd, semen se­lection, morbidity and mortality in the heifers, and age at first calving have major influence. Recently, a lot of dairy manage­ment publication, analysis and marketing strategy have includ­ed recommendations for increased cow longevity, genetically superior replacements, and “right-sized” heifer inventories. However, it would be wise to remain open to the value that an adequate or even plentiful supply of dairy replacements brings to an operation, and evidence for this consideration is at least as sound and plentiful as evidence in support of the opposite approach. Analyzing costs and benefits of the heifer enterprise needs to be considered carefully, and economic concepts such as fixed and variable costs, sunk costs and opportunity costs need to be applied appropriately.