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(An economic lot size is the number of identical products that should be produced, given the cost of changing the production process over to another product.) The undesirable result was poor return on investment for a factory. The chief engineer at Toyota in the 1950s, Taiichi Ohno, examined accounting assumptions and realized that another method was possible. The factory could implement JIT which would require it to be made more flexible and reduce the overhead costs of retooling and thereby reduce the economic lot size to fit the available warehouse space. JIT is now regarded by Ohno as one of the two ‘pillars’ of the Toyota Production System” (Wikipedia, 2007)...
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