in light of the softening demand,Garden State had aggressively reduced prices in 2005 and 2006 to stimulate sales.
Higher sales, the company believed, would allow it to realize greater economies of scale in production and to ride the learning, or experience, curve down to a lower cost position.
garden State's management had full confidence that normal weather and national economic policies would revive the ailing
economy and that the downturn in demand would be only a short-term problem. Consequently,production continued unabated, and inventories increased sharply.