Overproduction
Excess of supply over demand of products being offered to an economic market / From Wikipedia, the free encyclopedia
In economics, overproduction, oversupply, excess of supply or glut refers to excess of supply over demand of products being offered to the market. This leads to lower prices and/or unsold goods along with the possibility of unemployment.
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The demand side equivalent is underconsumption; some consider supply and demand two sides to the same coin – excess supply is only relative to a given demand, and insufficient demand is only relative to a given supply – and thus consider overproduction and underconsumption equivalent.[1]
In lean thinking, overproduction of goods or goods in process is seen as one of the seven wastes (Japanese term: muda) which do not add value to a product, and is considered "the most serious" of the seven.[2]
Overproduction is often attributed to previous overinvestment – creation of excess productive capacity, which must then either lie idle (or under capacity), which is unprofitable, or produce an excess supply.