Reference no: EM131945094

In the 1980s, Harley-Davidson, the American manufacturer of motorcycles, was losing millions of dollars each year and was in danger of shutting down. In response, management reduced substantially the size of the inventory of parts, components and tools at its factory. Explain how this practice would have enabled Harley-Davidson to reduce production costs and become more competitive with Japanese manufactures. (Hint: In 1980 Harley-Davidson needed to sell 53,000 bikes per year to break even, but two years later it needed to sell only 35,000 to break even.) In answering this question, assume that Harley-Davidson is operating in a perfectly competitive market.