In a Lean System, Large Inventories Are Not Considered a Type

question 65

True/False

In a lean system, large inventories are not considered a type of waste, because they prevent operator wait times.

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Definitions:

Net Operating Income

The profit realized from a business's operations after subtracting operating expenses from gross profit.

Sold Unit

Refers to a single unit of product that has been sold, representing a measure of the volume of sales transactions.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, influenced by the proportion of fixed costs to variable costs.

Variable Costs

Expenses that vary in direct relation to the amount of output or sales.