"JIT purchasing has many benefits but also some risks." Do you agree? Explain briefly.
A. Just-in-time (JIT) purchasing is the purchase of materials (or goods) so that they are delivered just as needed for production (or sales). Benefits include lower inventory holdings and less risk of inventory obsolescence and spoilage. Risks could include any failure on the part of suppliers which could result in the company's assembly plant not meeting its scheduled deliveries.
B. Just-in-time (JIT) purchasing is a "push-through" system that purchases finished goods for inventory on the basis of demand forecasts. Benefits include the need for a smaller warehouse for storage and lower inventory holdings. Risks could include suppliers that don't always share accurate and timely information about their sales, inventory levels, and sales forecasts with one another.
C. Just-in-time (JIT) purchasing is a purchasing system that omits recording some of the journal entries relating to the stages from purchase of direct materials to the sale of finished goods. Benefits include less bookkeeping required and time spent in a more productive manner. Risks could include suppliers that don't always share accurate and timely information about their sales, inventory levels, and sales forecasts with one another.
D. Just-in-time (JIT) purchasing, which is also called lean purchasing, is a "demand-pull" purchasing system that purchases each component in a production line as soon as, and only when, needed by the next step in the production line. Benefits include lower inventory holdings and less storage space needed. Risks could include any failure on the part of suppliers which could result in the company's assembly plant not meeting its scheduled deliveries.