George manages inventory for a company. The company has been struggling to reduce production costs in all departments for several months. What inventory management technique can George adopt to reduce storage costs without affecting the production flow?

Question

Amaris Chaney

Business

16 February, 14:59

George manages inventory for a company. The company has been struggling to reduce production costs in all departments for several months. What inventory management technique can George adopt to reduce storage costs without affecting the production flow?

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Answers (1)

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Bradford · Answer 1

The Just-in-time (JIT) inventory management

Explanation:

The Just-in-time (JIT) inventory management approach seeks to increase efficiency in the stock management process. JIT achieves efficiency by reducing the cost of holding stocks and eliminating wastage associated with keeping a high volume of inventory. Under JIT, materials are ordered when they are required for production. The business does hold stocks or will have minimal quantities in the stores.

George can adopt the just-in-time system in his place of work. His cost of holding stock will reduce as materials will be purchased to meet the current production requirements. Market demand determine production. It means there will be no storage of a high volume of finished goods, which ties up a lot of capital.