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:

Fixed Costs

Expenses that do not change regardless of the level of production or sales, such as rent, salaries, and insurance.

Cost Control

A process of managing and regulating the expenses of operating a business to maximise profitability.

Traditional Income Statement

A traditional income statement is a financial document that reports a company's financial performance over a specific period, showing revenues minus expenses to reveal net income or net loss.

Contribution Margin Format

A format of income statement that separates variable costs from fixed costs to calculate contribution margin, which helps in analyzing profitability.