Question

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.

Answer 1

Answer:

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.

Answer 2

The statement i.e. true regarding JIT is

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

The following information should be considered:

• It is an inventory management approach for the purchase of materials at the time when it is required for production.
• In JIT, there is no storing of materials for future production.
• The purchase of materials should be aligned with the production process.

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