Inventory and Inflation

Discussion in 'Economics' started by nutmeg, Apr 6, 2011.

  1. Years ago, when industry held a larger supply of inventory there was an opportunity to profit on rising prices/inflation.

    With the concept of "just in time", No one has anything in stock and not much of a supply overhead and zero chance of reaping some big profits from selling off lower cost inventory.

    Any thoughts regarding how this might affect our current business cycle?
  2. bkveen3


    Just in time is the base line for operation. Businesses also adjust input stockpiles based on expected future prices. When inputs are expected to rise they can and do stockpile at lower prices. They also hedge their future input purchases in futures markets. The same advantage exists with less of the volatility due to unknowns.