A just-in-time environment has smaller inventories than the traditional manufacturing environment.As a result,
A)larger production lot sizes are the rule,in order to realize the cost-effectiveness of long production runs.
B)the amount of working capital required for inventory typically increases.
C)the just-in-time environment experiences a lower inventory turnover than the traditional environment.
D)the just-in-time environment typically experiences a higher inventory turnover than the traditional environment.

Question

Quizplus · Accepted Answer

In a just-in-time environment, smaller inventories are maintained and goods are produced as needed, resulting in a higher inventory turnover than in the traditional manufacturing environment where larger inventories are maintained. Choice A is incorrect because JIT emphasizes smaller production runs. Choice B is incorrect because JIT actually reduces the amount of working capital required for inventory. Choice C is incorrect because JIT is known for its high inventory turnover.

A Just-In-Time Environment Has Smaller Inventories Than the Traditional Manufacturing