Which of the Following Statements Is True of Just-In-Time (JIT)

question 117

Multiple Choice

Which of the following statements is true of just-in-time (JIT) purchasing?

• A) In JIT purchasing, the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs.
• B) JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs.
• C) In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales.
• D) Only disadvantage of JIT purchasing is the higher level carrying and inspection costs.

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Definitions:

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to shareholders.

Total Assets

The sum of all current and non-current assets owned by a company, indicating its overall value.

Sales/Total Assets

A financial ratio that measures how efficiently a company is using its assets to generate sales.

Pretax Profit

Earnings before tax, indicating the profitability of a business before accounting for tax obligations.