Scenario 12-1.
Brian's Bicycle Manufacturing Company is having inventory control problems. Furthermore, inventory is critical to the cash flow of the business since each order requires a substantial cash outlay. Brian has been ordering through the use of visual control, but recently key components have run short and stopped the assembly line. Production has been increasing monthly due to increased demand. The demand for the bikes is 12,000 a year with the average ordering cost being $12. The cost of holding the inventory is $.95 per item. Brian comes to you for advice.
-In Scenario 12-1 above, one of the major disadvantages, using the current suppliers, of a just-in-time system would be which of the following?

Question

Scenario 12-1. 
Brian's Bicycle Manufacturing Company is having inventory control problems. Furthermore, inventory is critical to the cash flow of the business since each order requires a substantial cash outlay. Brian has been ordering through the use of visual control, but recently key components have run short and stopped the assembly line. Production has been increasing monthly due to increased demand. The demand for the bikes is 12,000 a year with the average ordering cost being $12. The cost of holding the inventory is $.95 per item. Brian comes to you for advice.
-In Scenario 12-1 above, one of the major disadvantages, using the current suppliers, of a just-in-time system would be which of the following?

Quizplus · Accepted Answer

The long lead time to receive components from the current suppliers would be a major disadvantage of implementing a just-in-time system. With JIT, components are ordered and received only when needed, which can reduce inventory and increase cash flow. However, if the lead time for receiving those components is long, it can cause delays in production and potentially harm the business. Therefore, without addressing the lead time issue, JIT may not be a viable solution for Brian's Bicycle Manufacturing Company.

Scenario 12-1. Brian's Bicycle Manufacturing Company Is Having Inventory Control Problems. Furthermore