Final answer:
The moving, handling, and storage of inventory are treated as nonvalue adding activities under lean manufacturing principles. Inventories are a small economic category, representing unsold goods. Lean management focuses on reducing such inventories to improve efficiency.
Step-by-step explanation:
The system under which the moving, handling, and storage of inventory are treated as nonvalue adding activities is often associated with lean manufacturing principles or lean management. The goal of lean is to eliminate waste and increase efficiency by focusing only on activities that add value to the end customer. Inventory is seen as a form of waste, or 'muda', because it ties up capital and resources without directly contributing to the finished product or service.
Inventories are considered a small category in the economy and represent goods produced by a business that have not yet been sold to consumers. When a business estimates demand accurately, the amount of inventories sitting on shelves tends to decline, demonstrating efficient management and operations. Conversely, if business is worse than expected, these inventories can rise, indicating potential inefficiency and overproduction. This aligns with the lean principle of producing only what is needed to meet customer demand and reducing excess inventory.