Advantages and Disadvantages of Just in Time

Just in time is an inventory management strategy which is used by the manufacturing companies so that these companies can reduce their cost of production. Under this strategy company does not hold inventories rather they produce as the demand for product arises. Just in time strategy has both advantages and disadvantages let’s look at both of them –

Advantages of Just in Time

  1. Just in time makes possible for the companies to use the cash for other productive purpose which would have been otherwise tied in the inventory.
  2. Since company buys the raw materials when there is need for it, company can have the advantage of buying the raw materials at lower price if the prices have reduced and also there is no risk of wastage of raw materials leading to cost saving for the company.
  3. Under this strategy company has more space as there is no inventory and therefore there is no requirement for storage and that vacant space can be used by the company for other productive purpose.

Disadvantages of Just in Time

  1. This strategy may lead to embarrassment for the company since if the company is not able to produce the product on time, it can have far reaching consequences on the goodwill of the company.
  2. Company is more dependent on the supplier of raw materials under this strategy and therefore chances of supplier exploiting the company increases when there is urgent need for raw material.
0 comments… add one

Leave a Comment

Related pages

what are the strengths and weaknesses of a market economymeaning of wholesale bankingwage push inflationfull form of rrb bankadvantages of a swot analysisadvantages of mixed economiesdrawbacks of online bankingadvantages and disadvantages of communism economyexample of the law of diminishing returnsskim pricing examplesskimming price strategy definitionthe advantages of globalisationthe conservatism conceptsubstitutes complementscpi acronymwikipedia in hindi narendra modilaw of diminishing utility examplestatutory liquidity ratio in hindiexamples of unearned revenueperpetual sucessiondefine payback methodexamples of direct taxesunearned rent revenue balance sheetconsistency concept in financial accountingadvantages of jit productiongoing concern accounting conceptadvantages and disadvantages of oligopoly competitionpenetration skimmingadvantages of carbon tradingmeaning of demand depositsmortgage hypothecationadvantage of socialismdisadvantages of mergerwhat are the advantages of globalisationconvertible bonds advantages and disadvantagesconservatism examplesdifference between corporation and conglomerateover absorption of overheadsnonsystematic riskdifference between capitalist economy and socialist economyzero based budgeting pros and consforfeiting definitionunqualified financial statementsdefinition of penetration pricingthe autocratic leaderwhat is fifo in accountingdisadvantages of diversificationtrade discount entrywhat is horizontal and vertical analysisvarious types of elasticity of demandexamples of elastic demand productsadvantages of lifowhat are the advantages and disadvantages of globalisationforfeiting financefactoring vs discountingsyndicated loan exampledifference between normal and inferior goodsreturn outwardsdistinguish between systematic and unsystematic riskmarginal costing advantagesdisadvantages of organisation structuredisadvantages of jitbank loans advantages and disadvantagesassumptions of capm explainedconvention of full disclosure in accountingcost of deflationfifo method of inventorystrengths and weaknesses of mixed economybalance sheet disadvantageswhat is the journal entry for prepaid rentadvantages and disadvantages of globalisation wikipediademerits of socialismnondurable goods listcompare socialism and capitalismwhat is the difference between shares and debentures