Question

Inventory Management: Presume you will implement Just-in-Time. Project the decrease in the percentage of inventory investment that will be realized. Justify your answer.

The answer should be one page

Answer 1

Through "Just in Time (JIT) " inventory system we can minimise the investment in the inventories. To be successful in implementation of JIT, process should be a continuous one. The implementation of the "Just in Time" method of inventory management could be possible through following points :

1) The scheduling of the raw-materials and finished goods inventory must be fixed. Any overlaping will lead to stocking of inventories.

2) The source of input material should be properly managed for acurate delivery of material of desired quality. Likewise, the finished goods should be sent out to distributors on time with the defined schedule.

3) There should be very little lead time between two deliveries of material.

4) The value of the inventory whether incoming or outgoing will be least of all the options available with us.

5)The space required to store the material would be of least as the material are used quickly with simultaneous quick delivery of the same.

6) The implementation of JIT system, will reduce a lot of inventory costs which will lead to higher income and margins.

7) The advantage of JIT System is that there will never be a heavy Work in Process inventory as no held up of inventory and continuous process of operation.

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