ch 42 lean production

Question 1

businesses that adopt just-in-time production do not…

Answer 1

• hold any stock of raw materials or components: suppliers have to deliver resources straight to the production line at regular intervals
• produce any goods unless they have been ordered: avoids the need to hold stock of finished goods

Question 2

advantages of just-in-time production

Answer 2

• cash flow is improved
• no waste, out-of-date or damaged stock
• no stock holding costs
• stronger links with suppliers

Question 3

disadvantages of just-in-time production

Answer 3

• higher ordering and administration costs
• relies hugely on suppliers’ reliability
• advantages of bulk-buying may be lost
• hard to cope with sudden changes in demand