Plasti-Form Group needs to economize on its inventory holding costs and plans to have materials arrive at the manufacturing plant when it is time for them to enter the production process rather than constantly keep them on hand at the facility. What system is Plasti-Form group implementing?

(JIT) inventory is a strategy to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs.

Explanation:

Just in time inventory, also known as JIT inventory, is the reduced amount of inventory owned by a business after it installs a just-in-time manufacturing system. Doing so eliminates a considerable amount of investment in inventory, thereby reducing the working capital needs of a business.

This JIT is a system of managing inventory that is designed to improve efficiency and reduce waste in a production process, and minimize inventory carrying costs as it costs money to hold inventory and the just-in-time system aims to eliminate that cost by reducing the amount of inventory that a company maintains. The concept is based on a cluster of lean manufacturing activities that are designed to only manufacture enough products to meet customer demand.

The elements of JIT include:

Continuous improvement

Eliminating waste

Good housekeeping - workplace cleanliness and organisation.

Set-up time reduction - increases flexibility and allows smaller batches

Levelled / mixed production - to smooth the flow of products through the factory.

The Key Features of JIT Inventory benefit businesses by:

Less reliance on forecasting

Lower warehouse costs

Less spoilage and waste

Higher Return On Total Assets ratio (ROTA)

Reduced all around inventory costs