What is the JIT inventory management? What types of costs are minimized with JIT control? In order to use JIT, is it better to have high ordering costs or low?
Why? Do you think companies that use JIT inventory control tend to have high or low carrying costs? Why?
What will be an ideal response?
Answer: JIT, or Just-in-Time inventory management control, is a management technique designed to minimize carrying costs of inventory for a firm. With JIT, it is important that management work with both suppliers and customers to carefully time the receipt of materials from the suppliers and the shipping of finished goods to the customer. JIT works well when uncertainties are few, suppliers are reliable, and carrying costs are high. JIT allows companies to carry less inventory, thus lowering carrying costs, but it also increases the number of orders so shipping costs need to be low.
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