Meditations and Learnings

Meditations and Learnings

Large Inventories - A Symptom of Economic Problems

Inventories are a net negative; they cost money and make none. Resources sitting in a warehouse are of no benefit to the economy. An inefficient delivery pipeline can make vast inventories practical. Unreliable suppliers mean it is entirely rational to protect against inevitable failures. Suppliers not incentivised to generate a profit, as in a centrally planned economy, lack the motivation to fix their poor service.