Question Tag: Just-in-Time

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  • 1 Marks

MI – May 2024 – L1 – SA – Q8 – Costing Techniques

Identifies an activity that adds value in a Just-In-Time (JIT) production system.

“Just-In-Time” works on a demand-pull basis and seeks to eliminate all waste and activities that do not add value. Which of the following activities adds value to a product?

A. Inspection time
B. Storage time
C. Processing time
D. Queuing time
E. Transport time

Answer: C. Processing time

Explanation: In a Just-In-Time (JIT) production system, value-adding activities are those that directly contribute to the transformation of raw materials into finished products. Processing time, which includes manufacturing or assembly, is a value-adding activity. Other activities like inspection, storage, queuing, and transport do not directly add value to the product but may be necessary under certain circumstances. JIT focuses on minimizing these non-value-adding activities to enhance efficiency.

  • 10 Marks

BMIS – April 2022 – L1 – Q3a – Operations strategy

Suggest five benefits a company would derive from adopting the Just-In-Time (JIT) inventory system.

You are the Accounts officer for Unimech Garages, a company that provides mobile vehicle repairs for faulty vehicles on the Accra – Kumasi and Accra – Takoradi highways. The company has adopted the Just-In-Time (JIT) inventory control system for its operations. The JIT inventory control system was adopted because all repairs performed vary from vehicle to vehicle, and there is no need to stock any spare parts since the repair team has no idea of the next repairs to be conducted as well as the type of spare parts they would require. Again, this inventory system was implemented to prevent employees from committing the offence of selling stocked spare parts for their individual gains.

Required:
Suggest FIVE (5) benefits the company would derive from this inventory system. (10 marks)

Benefits of Just-In-Time (JIT) Inventory System:

  1. Appropriateness: The adoption of the JIT inventory system ensures that the company receives and dispatches the appropriate spare parts and items as required, minimizing unnecessary stockpiling.
  2. Cost Reduction: The company benefits from reduced inventory and setup costs because spare parts are only ordered when needed, avoiding the costs associated with holding excess inventory.
  3. Service Quality: The quality of services delivered to customers improves because only high-quality parts are ordered to fix the problems of drivers and vehicle owners, ensuring that repairs are effective.
  4. Waste Control: The adoption of the JIT system helps eliminate waste and excess inventory that are not required, leading to more efficient operations and reduced costs.
  5. Eliminate Customer Delays: The system ensures that services delivered to customers are as fast as possible, as spare parts required for operations are available as and when needed, reducing delays.
  6. Emphasis on Value Addition: The company’s adoption of the JIT system ensures the elimination of non-value-added activities such as the internal movement of spare parts, focusing resources on activities that directly contribute to customer satisfaction.
  7. Inventory Security: JIT reduces the risk of employees selling stocked spare parts for personal gain, as inventory is minimized and controlled more effectively.
  • 8 Marks

BMIS – May 2016 – L1 – Q6b – Operations strategy

Explain Just-in-Time inventory control and state four advantages of its use in a manufacturing company

i) Explain Just-in-Time inventory control.
ii) State FOUR advantages of its use in a manufacturing company.

i) Explanation of Just-in-Time Inventory Control:
Just-In-Time (JIT) refers to an inventory control system that schedules materials to arrive just when they are required for use.
OR
JIT refers to the production system in which processing and movement of materials and goods occur just as they are needed, usually in small batches.
(2 marks)

ii) Advantages of Just-in-Time Inventory Control:

  1. Lowers Cost: The use of JIT systems lowers the cost of investment required in all forms of inventory control.
  2. Space Savings: JIT systems facilitate the saving of space that would be used to keep stock for long periods before they are used.
  3. Customer Satisfaction: There is greater customer satisfaction resulting from higher quality and better state of parts and products for manufacturing.
  4. Avoids Waste: JIT systems help the company to reduce waste and inefficiency because materials are requested and delivered per usage.
  5. Quick Response: The flexibility of JIT and the ability to supply materials in small batches enable companies to respond more quickly to market changes.
  6. Reduces Obsolescence: JIT reduces inventory obsolescence of materials because of reduced inventory.

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