Operating with the same number of inventory turns

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Reference no: EM132268742

The Wall Street Journal reported that “… although GM and Toyota are operating with the same number of inventory turns, Toyota’s processing rate is twice that of GM’s.” The discrepancy, concluded the writer, “could be due to much faster flow times (lead times) and lower inventories by virtue of Toyota’s production system.” With which of the following deductions do you agree:

The two statements are consistent.

The two statements are inconsistent. If both have the same inventory turns, then they have the same flow time but Toyota has higher average inventory than GM.

The two statements are inconsistent. If both have the same inventory turns, then they have the same flow time but Toyota has lower average inventory than GM.

The two statements are inconsistent. If both have the same inventory turns, then they have the same average inventory but Toyota has a higher flow time than GM.

The two statements are inconsistent. If both have the same inventory turns, then they have the same average inventory but Toyota has a lower flow time than GM.

In your answer, prove your position using Little's Law and algebra even though you do not have numbers to plug into the Little’s Law formula.

Reference no: EM132268742

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