JIT

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May 19, 2019 at 3:50 pm #516439
adarsh1997
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Hello,
“A just in time system implies relatively low reorder costs”
1. Could you explain how this statement is correct?
-In a JIT environment, everything starts with an order. So every time we get an order, then we contact the supplier to buy the materials needed; which therefore means that we will have high reorder costs.
Thanks,
May 19, 2019 at 4:24 pm #516452
John Moffat
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I don’t know where you read the statement, but on its own it is not true.
JIT will mean placing more orders (of fewer units each time). This might mean the reorder cost each time is lower (because there are fewer units) but it does not mean it will be lower in total.
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