MTEL Business Practice Exam

Category - Business Operations

When a company implements a just-in-time system for manufacturing inputs, it is most important to ensure that:
  1. Bulk rates for inputs are available from suppliers.
  2. Deliveries of inputs are scheduled during slack periods of production.
  3. Sufficient storage facilities for inputs are available.
  4. Deliveries of inputs from suppliers will not be interrupted.
Explanation
Correct Response: D. A just-in-time (JIT) manufacturing system is an inventory strategy that involves receiving goods as they are needed instead of carrying a large amount of inventory in a warehouse. Its goal is to reduce inventory costs and streamline processes. In order for JIT to be effective, deliveries of goods from suppliers must arrive on time and cannot be interrupted, or production will halt. Purchasing material in bulk (A) would require more storage space and increase inventory. Relying on a specific delivery schedule regardless of material needs could result in input shortages or surpluses and affect production or increase inventory (B). Ample space for inventory is the opposite of just-in-time inventory strategy, since it requires additional space and results in unused material sitting idle (C).
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