Letter to the Editor: ‘Just in time’ management bad for consumers
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This theory of inventory management posits that retailers, wholesalers and manufacturers carry only a minimum inventory, and this will maximize profitability. Otherwise you are tying up money that could be in your bank account drawing interest, invested in the market, or any number of other things that are revenue generating. Excessive inventory is not revenue generating, it’s a cost, not a profit.
The theory holds that as the last jar of “Bob’s Peanut Butter” is going out the front door of the store, the first jar of replacement inventory is coming in the back door to replace it. Therefore you are never “out of stock”. You’re also not tying up dollars in inventory.