Week 4 DQ - If your company implemented a JIT inventory...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Discuss the positive and negative aspects of using JIT inventory. Positives: - Helps prevent over-production. - Reduces capital that a company may otherwise have tied up in stock. - Reduces much of the need for warehouse space, allowing a company to use their space more efficiently. - Help eliminate waste. Negatives: - Reliance on suppliers. If a part or resource isn't available at that time, the company won't be able to produce, meaning they won't be able to fill orders. - Initial implementation will require a great deal of time and money.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: If your company implemented a JIT inventory system, what would the effects likely be on the company's carrying costs, shortage costs, and operating cycle? Carrying costs – Because the inventory is reduced or eliminated, the carrying costs would be dramatically lowered. Shortage costs – Expenses can expect to increase when the suppliers pass on their shortage costs to my company. Operating cycle – Assuming that all other factors stay the same, the reduced time a product stays in inventory will reduce the operating cycle....
View Full Document

This note was uploaded on 04/03/2012 for the course FIN 631 taught by Professor Leland during the Spring '12 term at Chadron State College.

Ask a homework question - tutors are online