L4M7 Exam Dumps | Which of the following statements is true of just-in-time (JIT) purchasing?

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Question 121/121

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

A. In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales

B. Only disadvantage of JIT purchasing is the higher level carrying and inspection costs

C. JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs

D. 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

Correct Answer: A

Just-in-time (JIT) purchasing is a systems approach for developing and operating the purchasing function. JIT purchasing along with the total quality management in many industries has been suc-cessful in reducing inventory and increasing the overall effectiveness of purchasing function and hence the productivity of manufacturing.
The just-in-time objectives of eliminating waste can be summarised in the 'five zeros: zero defects, zero set-up times, zero inventories, zero handling and zero lead times.
The correct answer should be 'In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales' because it expresses that upstream activity (purchasing) only occurs as the downstream activity (production or sales) triggers.

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