production needs. When production begins to consume materials in the second container, a purchase order is placed to refi ll the fi rst container. In a red-line system, a red line is painted on the...

production needs. When production begins to consume materials in the second container, a purchase order is placed to refi ll the fi rst container. In a red-line system, a red line is painted on the inventory container at a level representing the order point. Both systems require that production needs and estimates of receipt time from suppliers be fairly accurate. Having the additional container or stack of inventory on hand is considered to be reasonable based on the insignifi cant dollar amount of investment involved with C category items. 814 Chapter 18 Inventory and Production Management Th e control placed on C items is probably minimal also because of the lack of materiality of the inventory cost. Th e