inventory levels for firms using JIT inventory systems
compared to firms not using JIT will be
a. lower for raw materials, WIP and finished goods
b. higher for WIP and finished goods but lower for raw
materials
c. higher for both WIP and finished goods
d. higher for finished goods but lower for raw materials and
WIP
Answer a. lower for raw materials, WIP and finished goods | |||||||||
The just-in-time inventory system is a management strategy that aligns raw-material orders from suppliers directly with production schedules. Companies use this inventory strategy to increase efficiency and decrease waste by receiving goods only as they need them for the production process, which reduces inventory costs. This method requires producers to forecast demand accurately |
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