Inventory control techniques Flashcards
Just in time
Just-in-Time (JIT) inventory management is a strategy that aims to minimise inventory holding costs by acquiring and producing goods only as needed. By aligning raw material orders with production schedules and delivering products directly to customers, JIT reduces waste, frees up capital, and optimises storage space. This approach is particularly effective for perishable items and demands efficient supply chain management, especially for products with high demand variability or short shelf lives.
Just in case
Just-in-case inventory management involves holding large stock levels to minimise stock-outs. This strategy safeguards against unpredictable demand surges by ensuring ample supply. A company practising this strategy incurs higher inventory holding costs in return for a reduction in lost sales due to sold out inventory. Businesses often adopt this approach when demand forecasting is challenging or when maintaining continuous production is crucial.
