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ACCA Strategic Professional · Advanced Performance Management · Performance improvement models and techniques

Ostrava Metals is introducing a just-in-time (JIT) system as part of a lean programme. Which outcome is most consistent with successful JIT implementation?

Lower inventory holding costs is the outcome consistent with JIT. JIT is a pull system that buys and produces only against actual demand, so it depends on reliable suppliers and short set-up times. Large safety stocks, big batches and forecast-driven production are features of push systems that JIT seeks to remove.

  1. ALower inventory holding costs, supported by reliable suppliers and short set-up timesCorrect
  2. BHigher safety stocks to guard against supplier delays
  3. CLarger production batches to spread set-up costs
  4. DProduction scheduled on forecast demand to keep machines fully utilised

Explanation

JIT produces and purchases only as needed, so inventory falls, which needs reliable suppliers, quick set-ups and a pull system driven by actual demand. Higher safety stock, larger batches and forecast-driven production are all push-system features that contradict JIT.

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