Hmm, actually I don't mind inventory problem, because I think color variety in this game is too little. (1 armor has 3 color, 1 set has 4-5 color only, while other game usually have 10 color per gear).
But adjust the recipe method might be good too. Imaging if you can just have 3 dye color and mix-match them to make any color cloth yourself for each tier. 3x3x3 = 27 variety. red red red = red. red yellow red = orange.