The ultimate expression of the view that inventories are liabilities is demonstrated in the just-in-time inventory policy.

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Just-in-time (JIT) inventory policy is based on the idea of having minimal inventory on hand and ordering materials and supplies in small, frequent batches as needed. This policy is driven by the belief that inventory is expensive to hold, ties up capital, and is prone to obsolescence, theft, and damage. By keeping inventory levels low, JIT reduces carrying costs and improves cash flow, but it also increases the risks of stockouts, production disruptions, and supply chain disruptions. Overall, the JIT philosophy considers inventory to be a liability rather than an asset, and strives to eliminate or minimize it in order to increase efficiency, quality, and customer satisfaction.

The Ultimate Expression of the View That Inventories Are Liabilities