Electromac operates Just in time (JIT) in all its Staffordshire assembly plants.
This is most likely to result in …..?
Select ONE answer
- a decrease in the number of deliveries
- a decrease in buffer stocks
- an increase in re-order quantities
- an increase in average costs
Show the workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple-choice question is suitable for Business Studies KS4 & KS5 classes
The answer is 2
- Not correct – there will be an increase in the number of deliveries as inventory is ordered in smaller quantities as and when needed.
- Correct – Definition of JIT e.g. inventory system that does away with the need to hold large quantities of raw materials OR Buffer stocks are a supply of inputs held as a reserve to safeguard against unforeseen shortages or demands. This results in Electromac only holding just enough components for the current production. The need for buffer stocks is reduced because supplies are delivered as needed.
- Not correct – re-order quantities will be reduced as smaller amounts will be ordered each time that are specific to each job.
- Not correct – JIT results in a decrease in average costs as less capital is tied up in inventory and warehousing.
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