reduces inventory turnover
reduces inventory holding costs
increases warehousing costs
increases buffer stock of inventory
A JIT system leads to major cost savings from increasing inventory turnover and reducing
inventory holding costs, such as warehousing and storage costs and the cost of capital
tied up in inventory. One drawback of JIT systems is that they leave an organization
without a buffer stock of inventory.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Just-in–time (JIT) Inventory System
A disadvantage of a JIT system is that it ________.
increases inventory turnover
reduces inventory holding costs
ties up much capital in inventory
leaves no buffer stock in inventory
A JIT system leads to major cost savings from increasing inventory turnover and reducing
inventory holding costs, such as warehousing and storage costs and the cost of capital
tied up in inventory. One drawback of JIT systems is that they leave an organization
without a buffer stock of inventory.