Just In Time

Question 1

what is just in time?

Answer 1

Is an alternative approach to inventory management – limits the amount of inventor held by the business to near enough zero.

Question 2

just in time only works when?

Answer 2

there is a close relationship between manufacturer and supplier.

Question 3

why is timing crucial when using just in time?

Answer 3

there is no room for storage

Question 4

how is just in time an effective method?

Answer 4

the savings can be very high.

Question 5

what happens if there is no demand?

Answer 5

nothing is produced unless there are customers demanding the product.

Question 6

how is just in time done?

Answer 6

This is done through the marketing department predicting expected demand and figures or the business waits on actual order before they start production.

Question 7

what are the advantages to just in time?

Answer 7

• Capital is not tied up in stock and can be used elsewhere.
• More responsive to consumer demand.
• Reduction in storage costs – space, staff
• Reduction stock deterioration, wastage, theft.
• Closer relationship with suppliers.

Question 8

what are the disadvantages to just in time?

Answer 8

• Production may be disrupted if supplies do not arrive on time – external factors.
• High dependency on the reliability of suppliers.
• Increased ordering, admin and delivering costs.
• May lose bulk-buying discounts.
• May not be able to respond to a sudden increase in demand.
• No room for error – no extra materials