What operational system minimizes inventory storage costs by receiving materials from suppliers exactly when needed in production?
AMaterial Requirements Planning (MRP)
BJust-In-Time (JIT) System
CEconomic Order Quantity (EOQ)
DPeriodic Inventory System
Explanation
• Just-In-Time (JIT) inventory management aligns material deliveries directly with production schedules, reducing warehouse holding costs.
• Developed by Toyota, JIT eliminates raw material stockpiles and waste, requiring high supplier reliability.
• Under JIT, inventory holding costs are minimized, but risk of stockouts increases if supply chains experience delays.
Exam Relevance
- Topic: Cost & Management Accounting
- Subtopic: Inventory Systems
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