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CMA Final · Strategic Cost Management · Just in Time (JIT)

Which of the following is a defining feature of a Just in Time (JIT) purchasing arrangement with suppliers?

JIT purchasing uses few suppliers under long-term contracts and takes frequent small deliveries straight to the production line. Quality is certified at source, so inventory and inspection are minimised. Bulk buying, many suppliers and heavy incoming inspection reflect traditional purchasing, not JIT.

  1. AOrders placed in large lots to earn maximum quantity discounts
  2. BFew suppliers on long-term contracts, with frequent small deliveries directly to the production lineCorrect
  3. CWide supplier base chosen each period on the lowest quoted price
  4. DHeavy incoming inspection of each lot by the buyer's stores department

Explanation

JIT purchasing relies on a small number of reliable suppliers, long-term relationships, certified quality and frequent small deliveries close to the point of use. Large discount-driven lots, wide supplier bases and heavy incoming inspection all belong to a traditional just-in-case approach.

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