The chapter mentions that two trends in American industry are establishing higher standards (perhaps ideal standards) as benchmarks for evaluating actual results and adopting just-in-time (JIT) production systems and total quality man¬ agement (TQM).

There is a growing body of evidence to support the notion that successful adopters of JIT have higher quality production processes than nonadopters. One ofthe more interesting studies conducted to date examined supplier/consumer relationships among U.S. firms. The study found that the highest quality output was generated by the supplier firm when both the supplier firm and the consumer firm utilized JIT production techniques. The lowest quality output was generated in relationships where neither the supplier, nor the consumer, utilized JIT production techniques.

a. Why is lack of quality (e.g., substantial number of reworks) in the production process a less tolerable problem in JIT firms than other firms?

b. Based on your understanding of JIT, why is there a need for more com¬ munication between supplier and consumer firms when JIT production sys¬ tems are used by one or both firms?

c. How could the communication mentioned in part b lead to higher quality production?

d. Which would be of greater concern to a firm practicing JIT, an unfavorable direct material price variance or an unfavorable direct material efficiency variance (assume they are of equal magnitude)? Explain.

LO1