Which of the Following Is True About Firms Using a Just-In-Time

question 108

Multiple Choice

Which of the following is true about firms using a just-in-time (JIT) inventory system?

• A)A company is more likely to have excess unsold inventory that it has to write off against earnings.
• B)Parts enter the manufacturing process immediately; they are not warehoused.
• C)It is difficult to spot and fix defective inputs.
• D)The amount of working capital a company needs to finance inventory increases.
• E)A firm has ample buffer stock of inventory.

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Definitions:

Production Cycle

The series of steps involved in producing a good or service, from initial raw materials to the finished product.

Kanban

A visual scheduling system that controls the logistical chain from a production point of view, aiming to improve manufacturing efficiency by limiting work-in-progress items.

Safety Stock

Additional inventory kept on hand to guard against stockouts caused by uncertainties in demand and lead-time.

Kanbans

A scheduling system for lean manufacturing and just-in-time (JIT) production that signals the need to move materials within a production facility.