Lower Price. High inventory mean more production capacity is needed and, thus more investment in equipment and space. Since lead time and high work-in-process inventoried are usually correlated, high inventories may often be the cause of overtime. Overtime, of course, increase operating expenses and lowers profitability. Lower inventories reduce carrying costs, per-unit investment costs, and other operating expenses such as overtime and special shipping charges. By lowering investment and operating costs, the unit margin of each product is increased, providing more flexibility in pricing decisions. Lower prices are possible or higher product margin if competitive conditions do not require prices to be lowered.