The president of Penman Corporation, John Burton, has asked you, the company's controller, to advise him on whether Penman should develop a just-in-time (JIT) inventory system Your research concludes that there is a high cost associated with inventory storage facilities; that inventories use a large portion of the company's cash flow; and because of the nature of the inventory, there is a significant amount of shrinkage. Research of the competition shows that neither of Penman's two competitors uses a JIT inventory system.

Most of Penman's employees are trained to do only one job and belong to a lo cal union. The union is strong and, in the past, has been opposed to major production changes. The union believes major changes will cause job termination of union employees.

Your research indicates that Penman's major production item (a fairly new product in the market) should continue to have strong sales growth.

Using the information provided, advise John Burton to either continue the present system or work to develop a JIT inventory system.