The Just-In-Time (JIT) Approach to Inventory Management

question 96

Multiple Choice

The just-in-time (JIT) approach to inventory management

• A)allows greater flexibility as to when products can be manufactured.
• B)results in higher inventory levels but reduces ordering and setup costs.
• C)results in lower inventory carrying costs.
• D)None of the above are correct.

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Definitions:

Marginal Propensity

The tendency of an individual or household to spend an additional dollar of income on consuming goods and services.

Simple Spending Multiplier

The ratio of a change in output to a change in autonomous spending that caused it, illustrating the impact of fiscal policy on total economic output.

Simple Spending Multiplier

A formula used in economics to determine the impact of a change in autonomous spending on the aggregate output, highlighting the amplification of initial spending through the economy.

Marginal Propensity

The ratio of change in an economic variable (such as consumption or saving) in response to a change in another (such as income), indicating the responsiveness of the variable.