Under a JIT system,
A) customer demand pulls units through the production line.
B) safety stock is set at relatively high levels.
C) stockouts are never a problem.
D) inventory levels are set at 10% of total production levels.
E) production is set at a level to maximize factory output.

Question

Quizplus · Accepted Answer

A JIT system is characterized by producing only what is needed by the customer, which means that customer demand pulls units through the production line. This helps to minimize waste and reduce inventory levels. Safety stock is minimized or eliminated in a JIT system to further reduce inventory costs, so choice B is incorrect. Stockouts can still be a problem if demand exceeds production capacity, so choice C is incorrect. There is no set percentage for inventory levels in a JIT system, so choice D is incorrect. Production is set at a level to meet customer demand and avoid overproduction, so choice E is incorrect.

Under a JIT System