How are finished goods inventories treated with JIT manufacturing?
A)They are kept high to avoid stockouts.
B)They are held in various locations for faster delivery to customers.
C)They are insignificant.
D)They are kept high to let the company take advantage of volume discounts.

Question

Quizplus · Accepted Answer

Finished goods inventories are considered unnecessary in JIT manufacturing as the focus is on producing goods in response to customer demand. The principle of JIT is to produce goods only when they are needed, which makes it unnecessary to maintain finished goods inventories. Instead, JIT manufacturing relies on continuous production and delivery of small batches of goods as per customer orders to avoid overproduction and excess inventory. Therefore, finished goods inventories are considered insignificant in JIT manufacturing.

How Are Finished Goods Inventories Treated with JIT Manufacturing