When Comparing the Traditional Approach of Inventory Management to JIT

question 115

Multiple Choice

When comparing the traditional approach of inventory management to JIT, which of the following statements is true?

• A)The traditional approach accepts the existence of setup costs, but not carrying costs or inventories. JIT accepts the existence of setup and carrying costs, but pushes for zero inventories.
• B)The traditional approach accepts the existence of carrying costs and inventories, but not setup costs. JIT accepts the existence of setup costs but not carrying costs and pushes for zero inventories.
• C)The traditional approach accepts the existence of both setup costs and carrying costs and attempts to find the order quantity that best balances those costs. JIT does not accept either setup costs or carrying costs and pushes for zero inventory levels.
• D)The traditional approach does not accept carrying costs or setup costs. JIT minimizes both setup and carrying costs by finding the best order quantity to balance these costs.

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Definitions:

Basin and Range Province

A vast geographical area in the United States characterized by alternating basins and mountain ranges, formed by stretching of the Earth's crust.

Gulf Coast Region

A geographical area in the United States bordering the Gulf of Mexico, known for its warm climate, wetlands, and as an important area for energy production and shipping.

Appalachian Mountains

A mountain range in eastern North America, extending from Canada to the southern United States, known for its rich biodiversity and history.

Fold and Thrust Belt

A series of mountainous folds and thrust faults that develop near convergent tectonic plate boundaries, where one plate is forced over another.