One inherent risk to using lean philosophy is that companies are at higher risk of inventory shortage during volatile times such as strikes, weather, etc. than when using the traditional philosophy. True / False.

Question

Chaim Alvarez

Business

18 October, 17:06

One inherent risk to using lean philosophy is that companies are at higher risk of inventory shortage during volatile times such as strikes, weather, etc. than when using the traditional philosophy. True / False.

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Answers (1)

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Micaela Stein · Answer 1

True

Explanation:

As in the lean philosophy the production is based on specific customer demands, there are chances that when the order is received then the inventory required is not present and that the inventory is not held in hand.

Whereas in the traditional philosophy the production is based on the principle of budgets and sales forecast, accordingly the sales keeps on moving and the inventory is also held in hand prior to confirmation of order from customers.

Since there is no planning before the order is received from customers under lean, in emergency cases, or scarcity of resources, the inventory will fall short, and acquisition of inventory would not be easy.