Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 1 - Managerial Accounting: An Overview - Questions - Page 19: 1-13

Answer

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Work Step by Step

In lean production, a company only produces units in response to customer orders, so inventory is of minimal importance. The production is limited only up-to the requirement of the customer. This avoids huge backlog of inventories and saves inventory carrying costs and storage space. The company need not store inventories for future sales.
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