Which of the following statements is true of the financial and nonfinancial measures in just-in-time production systems?
A) The inventory turnover ratio is expected to decrease.
B) Units produced per hour are expected to increase.
C) Manufacturing cycle time is expected to increase.
D) Total setup time for machines with respect to total manufacturing time is expected to increase.

Question

Quizplus · Accepted Answer

The just-in-time production system aims to eliminate waste and increase efficiency. Financial measures such as inventory turnover ratio are expected to decrease because the inventory level is reduced in a JIT system. However, nonfinancial measures such as units produced per hour are expected to increase because of the elimination of waste and better flow of materials in the production process. Manufacturing cycle time is also expected to decrease in a JIT system, and the total setup time for machines with respect to total manufacturing time is expected to decrease as well.

Which of the Following Statements Is True of the Financial