Which of the following statements is true of just-in-time (JIT) purchasing?
A) In JIT purchasing, the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs.
B) JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs.
C) In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales.
D) Only disadvantage of JIT purchasing is the higher level carrying and inspection costs.

Question

Quizplus · Accepted Answer

JIT purchasing involves purchasing raw materials or goods just in time for production or sales, eliminating the need for excess inventory and reducing carrying costs. The optimal safety stock level may vary depending on the specific situation and cost considerations. The EOQ model may be helpful in determining ordering quantities, but JIT purchasing also involves reducing lead times and coordinating with suppliers. While carrying and inspection costs may be reduced in JIT purchasing, there are also potential risks associated with relying heavily on just-in-time delivery, such as supply chain disruptions or quality issues.

Which of the Following Statements Is True of Just-In-Time (JIT)