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Horngren'S Financial And Managerial Accounting
Found in: Page 1063

Short Answer

What is a just-in-time management system?

Just-in-time is a manufacturing system that focuses on reducing waste by procuring inventory as and when needed.

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Step by Step Solution

Just-in-time management system

Just-in-time management system is a modern manufacturing system in which goods are produced on demand. In comparison to the traditional manufacturing system just in time manufacturing system reduces inventory cost, reduces wastage, and delivers finished goods to the customers just in time.

How the JIT Management system works

Under JIT management system, manufacturers contract with the supplier for procuring raw materials frequently in small quantities. The inventories are ordered when the demand comes for production. Thus there is no storage cost under JIT. Due to small quantities, there are also reduced wastage costs. The finished goods inventory under JIT is kept to a minimal amount.

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