Which of the following statements is true of just-in-time (JIT) purchasing? A. Only disadvantage of JIT purchasing is the higher level carrying and inspection costs. B. In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales. C. JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs. D. In JIT purchasing, the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs.

Question

Nathan Blackburn

Business

27 March, 10:26

Which of the following statements is true of just-in-time (JIT) purchasing? A. Only disadvantage of JIT purchasing is the higher level carrying and inspection costs. B. In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales. C. JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs. D. In JIT purchasing, the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs.

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Sarahi · Answer 1

B. In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales.

Explanation:

JIT stands for Just in time management. It is an inventory management approach that advocates for the purchase of materials just when they are needed for production. In JIT, there is no storing of materials for use for future production. The purchase of materials is aligned with the production process.

The success of JIT is dependent on management ability to forecast sales volumes accurately. Management must work with reliable suppliers to ensure that materials are available when required. JIT lower's the cost of inventory management by eliminating the need to store huge quantities of materials. It reduces wastage by doing away with losses that arise due to the storage of bulk materials.