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Which two of the following statements are true in the context of a just in time (JIT) inventory system?
1. It can result in much reduced inventory holding costs.
2. It inevitably increases the need for safety inventories
3. It requires suppliers to operate sound quality control procedures
4. It works best if supplies are obtained from a number of different suppliersThe correct answer given was 1 and 3. However, I still don’t understand why 3 is correct. Could you also explain why 2 and 4 are wrong?
Thank you
2 is wrong because the aim is to keep inventory levels to an absolute minimum and get deliveries from suppliers as the materials are needed
3 is correct because if they deliver faulty materials to us then they will have to replace them immediately are face penalties
4 is wrong because we need strong relationships with suppliers and contracts that ensure quick deliveries
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