The theory of stock piling inventory for immediate use and shipment has become obsolete as the concept of just in time has become more prevalent. The process of determining what demand is expected to be, also known as forecasting, is the first step to determining a company's needs.
Do you believe that this lack of stock piling inventory could have a negative side for consumers and companies in the 21str century? How vulnerable are the systems we have in place for food, durable goods and automobiles, for example?
Lean, 'just in time' inventory management is excellent for times when environmental conditions are normal allowing goods to be shipped efficiently across international borders, but it can fail badly in times of natural and/or man-made disasters without the support of lean structure. A great example of this is the 2011 tsunami disaster in Japan, where a major earthquake followed by a tsunami seriously impaired the ability of Japanese car manufacturers to ship parts to their factories outside of Japan. Because ...
The theory of stock piling inventory versus just in time delivery is examined in the solution.