Explain how a just-in-time operating philosophy reduces the time it takes to complete the production of a product. Include in your answer the classifications of time that are affected. How does such a change help to reduce product costs?

Answer 1

The basic ingredient in the just-in-time operating philosophy is the relocation of machinery so that product movement between operations is minimized. Also, raw materials and parts arrive at the plant when needed, and since the operation is driven by a customer's order, the order is shipped as soon as it is completed. In addition, machine operators perform on-site inspections. These changes tend to reduce or eliminate separate product inspection time, moving time, queue time, and storage time. Product costs are reduced because costs of storage, moving, inspection, and floor space occupied by work in process inventory are all reduced. Very little working capital is tied up in inventories as compared to the traditional manufacturing environment. Also, the amount of direct labor required to run the new work cells is much less than the labor needed in the traditional setting.