CMA Study Group

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  • 1.  Could you please help me for the question?

    Posted 10-25-2013 03:41 AM

    Question: 32 Which changes in costs are most conducive to switching from a traditional inventory ordering system to a just-in-time ordering system?
    Cost per
    Inventory Unit
    Purchase Order
    Carrying Costs
    Answer (B) is correct.
    A JIT system is intended to minimize inventory. Thus, if inventory carrying costs are increasing, a JIT system becomes more cost effective. Moreover, purchases are more frequent in a JIT system. Accordingly, a decreasing cost per purchase order is conducive to switching to a JIT system.

  • 2.  RE: Could you please help me for the question?

    Posted 06-09-2022 09:56 AM
    When there is a high cost for caring for inventory and the cost of PO not too much (low cost ) so this is the best chance for JIT
    JIT will fix the inventory cost by decreasing the need for inventory and increasing the POs
    JIT will do a lot of P.Os because there is no inventory on hand

    Ahmed Hassanein
    Chief Financial Officer