Chapter 2, Problem 3QFT

To determine

Before lean manufacturing innovations, Japan mostly sold consumer electronics to the United States. How did lean manufacturing innovations alter Japan’s comparative advantage vis-à-vis USA.?

Concept Introduction:

Lean Manufacturing:

Lean manufacturing or simply lean refers to a systematic method for waste minimization within a manufacturing system without the loss of productivity. A more precise definition of the term is “doing more with less by employing 'lean thinking.' Lean manufacturing involves never-ending efforts to eliminate or reduce waste in design, manufacturing, distribution, and customer service processes.”

Waste in this context is defined as any activity that does not add value to the customer or for which the customer is not willing to pay. In lean manufacturing there are seven types of waste:

1. Over-production against plan
2. Waiting time of operators and machines
3. Unnecessary transportation
4. Waste in the process itself
5. Excess stock of material and components
6. Non-value-adding motion
7. Defects in quality

Comparative Advantage:

In international trade, if a country can produce goods and services at a lower opportunity cost than other countries, it is said to have a comparative advantage.