=+17-29 KKK JIT purchasing, relevant benefits, relevant costs (CMA, adapted) OBJECTIVE 5 Marjack Ltd is an automotive supplier that uses automatic turning machines to manufacture precision parts from steel bars. Marjack’s inventory of raw steel averages $395000. Paul Martin, CEO of Marjack, and Karin Wang, Marjack’s management accountant, are concerned about the costs of carrying inventory. The steel supplier is willing to supply steel in smaller lots at no additional charge.

Karin identifies the following effects of adopting a JIT inventory program to virtually eliminate steel inventory: