Loftis Manufacturing,Inc has recently installed a just-in-time inventory system. Describe the effect this is likely to have on the company's carrying costs, shortage cost,and operating cycle.
Just in time inventory involves lower inventory level, decreased
order to received time and lower storage costs. Since inventory
levels are very low hence carrying cost decreases Since it doesnot
need space, warehouse rent cosr and other carring costs
decreases.
Shortage cost might increase if lead time is high or the suppler is
located far away. If lead time is less then shortage cost won't be
there.
Ooerating cycle involves inventory days and account receivable
days. Since inventory is less, inventory days decreases and hence
the operating cycle also decreases.
Loftis Manufacturing,Inc has recently installed a just-in-time inventory system. Describe the effect this is likely to...
If a firm uses a just-in-time inventory system, what effect is that likely to have on the number and location of suppliers? What are the advantages and disadvantages of a just-in-time inventory system?
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