Characteristics of just-in-time partnerships do not include
A) removal of in-transit inventory
B) large lot sizes to save on setup costs and to gain quantity discounts
C) long-term contracts
D) few suppliers
E) buyer helps supplier to meet the quality requirements
The correct answer and explanation is :
The correct answer is:
B) Large lot sizes to save on setup costs and to gain quantity discounts
Explanation:
Just-in-Time (JIT) partnerships focus on reducing waste, improving efficiency, and ensuring that materials and products arrive precisely when needed in the production process. The goal is to minimize inventory costs and enhance supply chain coordination. Below is an explanation of why option B is incorrect and why the other options align with JIT principles.
- Removal of In-Transit Inventory (A) – Correct
JIT systems aim to eliminate unnecessary inventory, including in-transit inventory. Companies work closely with suppliers to receive goods just when they are needed, reducing the need for storage. - Large Lot Sizes (B) – Incorrect
JIT encourages small, frequent deliveries to reduce holding costs and excess inventory. Large lot sizes contradict this principle, as they lead to overproduction, increased storage needs, and inefficiencies. Instead of producing in bulk to save setup costs or get quantity discounts, JIT focuses on streamlining production with minimal waste. - Long-Term Contracts (C) – Correct
JIT relies on stable, long-term relationships with suppliers to ensure timely and consistent delivery of materials. These contracts help in maintaining quality and coordination. - Few Suppliers (D) – Correct
Instead of working with many suppliers, JIT systems prefer a limited number of reliable suppliers. This simplifies supply chain management and ensures strong collaboration for quality improvements. - Buyer Helps Supplier Meet Quality Standards (E) – Correct
JIT partnerships emphasize quality at the source. Buyers often collaborate with suppliers to improve processes and meet quality standards, reducing the need for inspections and defects.
In summary, JIT aims to minimize waste and inventory, making small lot sizes essential. Large lot sizes contradict JIT principles, making option B incorrect.