The controller for Warner Mfg. is trying to implement some of the characteristics of a just-in-time (JIT) inventory system. She has accumulated data on Warner's present inventory system and obtained some projections and estimates of what the results of a JIT system would be. The inventory holding cost is $0.75 per unit, per month. Warner currently purchases 120,000 units every four months. Under a JIT system Warner would purchase 30,000 units every month. The monthly inventory schedule and the controller's estimate for a JIT system are provided below: (Assume the above trend continues throughout the year.)
Required: Which system should Warner use, and why?

Question

The controller for Warner Mfg. is trying to implement some of the characteristics of a just-in-time (JIT) inventory system. She has accumulated data on Warner's present inventory system and obtained some projections and estimates of what the results of a JIT system would be.  The inventory holding cost is $0.75 per unit, per month. Warner currently purchases 120,000 units every four months. Under a JIT system Warner would purchase 30,000 units every month. The monthly inventory schedule and the controller's estimate for a JIT system are provided below:  (Assume the above trend continues throughout the year.)
Required: Which system should Warner use, and why?

Quizplus · Accepted Answer

The Answer of The controller for Warner Mfg. is trying to implement some of the characteristics of a just-in-time (JIT) inventory system. She has accumulated data on Warner's present inventory system and obtained some projections and estimates of what the results of a JIT system would be.  The inventory holding cost is $0.75 per unit, per month. Warner currently purchases 120,000 units every four months. Under a JIT system Warner would purchase 30,000 units every month. The monthly inventory schedule and the controller's estimate for a JIT system are provided below:  (Assume the above trend continues throughout the year.)
Required: Which system should Warner use, and why?

The Controller for Warner Mfg