Getting Control of Inventories

Companies tighten up on an old form of waste

One of the most closely watched signs of business activity is the level of company inventories. As sales slump during a recession and stockpiles of unsold goods swell, businessmen begin dumping their inventories and cutting back on orders from suppliers. In the process, layoffs surge throughout industry, and inventories grow skimpy. Then, when sales-hungry businessmen detect the first signs of an improving economy, they begin to rehire workers and restock warehouses. The level of inventories, thus, is usually a telltale signal of a recession or recovery.

Inventory liquidation has been driving the economy steadily...

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