ACCA Applied Knowledge · Business and Technology · Technological factors
A clothing company adopts a just-in-time (JIT) system supported by software that links its sales tills directly to its suppliers' ordering systems. What is the main operational benefit?
The main benefit is lower inventory holding costs, because replenishment is triggered by actual sales data. JIT does not eliminate supply chain risk and in fact increases dependence on suppliers, and it aims to reduce, not increase, the stock held in stores.
- ALower inventory holding costs because replenishment follows actual demandCorrect
- BElimination of all supply chain risk
- CHigher safety stock levels held at each store
Explanation
Linking sales data to suppliers lets orders reflect real demand, cutting inventory levels and holding costs. JIT does not remove supply risk; dependence on suppliers can actually increase it. It also reduces rather than raises safety stock.
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