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Which of the following statements about JIT is correct?
A JIT protects an organisation against risks of disruption in the supply chain
B A narrow geographical spread in a business makes JIT more difficult to apply
C With JIT, there is a risk that stocks could become obsolete
D JIT is more difficult to implement when it is not easy to predict patterns of demandAccording to me every option is wrong.
1. If due to some external causes- suppliers stop delivering it can have a detrimental impact on the company.
2 No because if it’s narrow then suppliers will be in near distance and on time delivery can be ensured.
3 no because company only orders when there is need to produce and hence no inventory.
4 no because company doesn’t have to know demand patterns in advance because it ‘s pull system and orders are only placed when they receive sales order.Tell me where I am lagging behind?
Assuming that you found this question in a Revision Kit, I am surprised that the book does not just provide an answer but also an explanation!
Although each of your comments is correct, D is the problem. The reason is that it is a pull system, for JIT to work ‘perfectly’ it needs suppliers to deliver instantly. In the real world there is always going to be some delay between ordering goods and receiving goods which means placing an order in advance to be able to avoid running out of inventory (and production being halted for a period). If they do know the pattern of demand in advance then they can time orders so that the goods are received just as they run out of inventory. If they are unable to predict the pattern of demand then it does make it a bit harder to implement ‘perfect’ JIT.
Your explanation makes sense. Thank you ? And the answers are provided it’s just that I didn’t understand the rationale behind the correct answer.
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