IB Business Management Topic 5.6.2 JIT Vs. Just-in-case Revision Notes (HL)

IB Business Management Topic 5.6.2 JIT Vs. Just-in-case Revision Notes (HL) | RevisionDojo

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Balancing Efficiency with Preparedness

Consider that you're running a cafe and want to keep costs low, but also ensure you never run out of ingredients during a busy morning rush.
How do you strike the right balance?
This is where Just-in-Time (JIT) and Just-in-Case (JIC) inventory management systems come into play.

Just-in-Time (JIT): Efficiency at Its Core

Definition

Just-in-Time (JIT)

JIT is an inventory management system where materials and products are produced or sourced only when needed.

The goal is to minimize inventory costs by aligning production closely with demand.

Advantages of JIT

Reduced Inventory Costs: By keeping minimal stock, businesses save on storage, insurance, and maintenance costs.
Minimized Waste: Less inventory means fewer items become obsolete, damaged, or expired.
Increased Cash Flow: Funds aren't tied up in unsold inventory, allowing businesses to invest elsewhere.
Enhanced Efficiency: JIT encourages streamlined processes and close coordination with suppliers.

Example

Toyota is a pioneer of JIT.
The company orders parts only when needed for production, reducing storage costs and waste.

Disadvantages of JIT

Vulnerability to Disruptions: Any delay in the supply chain can halt production entirely.
Dependency on Suppliers: JIT requires reliable suppliers who can deliver high-quality materials on time.
Higher Ordering Costs: Frequent small orders can increase administrative and shipping expenses.
Limited Flexibility: Sudden spikes in demand can lead to stockouts and lost sales.

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Definition

Paywall

(on a website) an arrangement whereby access is restricted to users who have paid to subscribe to the site.

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Duis aute irure dolor in reprehenderit

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Note

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam quis nostrud exercitation.

Excepteur sint occaecat cupidatat non proident

Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione voluptatem sequi nesciunt. Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit.

Tip

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris.
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum.

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Balancing Efficiency with Preparedness

Consider that you're running a cafe and want to keep costs low, but also ensure you never run out of ingredients during a busy morning rush.
How do you strike the right balance?
This is where Just-in-Time (JIT) and Just-in-Case (JIC) inventory management systems come into play.

Just-in-Time (JIT): Efficiency at Its Core

Definition

Just-in-Time (JIT)

JIT is an inventory management system where materials and products are produced or sourced only when needed.

The goal is to minimize inventory costs by aligning production closely with demand.

Advantages of JIT

Reduced Inventory Costs: By keeping minimal stock, businesses save on storage, insurance, and maintenance costs.
Minimized Waste: Less inventory means fewer items become obsolete, damaged, or expired.
Increased Cash Flow: Funds aren't tied up in unsold inventory, allowing businesses to invest elsewhere.
Enhanced Efficiency: JIT encourages streamlined processes and close coordination with suppliers.

Example

Toyota is a pioneer of JIT.
The company orders parts only when needed for production, reducing storage costs and waste.

Disadvantages of JIT

Vulnerability to Disruptions: Any delay in the supply chain can halt production entirely.
Dependency on Suppliers: JIT requires reliable suppliers who can deliver high-quality materials on time.
Higher Ordering Costs: Frequent small orders can increase administrative and shipping expenses.
Limited Flexibility: Sudden spikes in demand can lead to stockouts and lost sales.

Definition

Paywall

(on a website) an arrangement whereby access is restricted to users who have paid to subscribe to the site.

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Note

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam quis nostrud exercitation.

Excepteur sint occaecat cupidatat non proident

Tip

Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris.
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum.

Unit 1: Introduction to Business Management - Core operational components and business functions6 subtopics

Unit 2: HR Management - Motivation, Structure, Hierarchy7 subtopics

Unit 3: Financial Management - Accounting, Ratio evaluation, Core Financial Documents9 subtopics

Unit 4: Marketing Management - The 7 P's, strategies and forecasting6 subtopics

Unit 5: Operations Management - Production Methods, Production planning and management9 subtopics

BM Toolkit - Core business frameworks and tools15 subtopics

IB Business Management 5.6.2 JIT Vs. Just-in-case Notes

Unit 1: Introduction to Business Management - Core operational components and business functions6 subtopics

Unit 2: HR Management - Motivation, Structure, Hierarchy7 subtopics

Unit 3: Financial Management - Accounting, Ratio evaluation, Core Financial Documents9 subtopics

Unit 4: Marketing Management - The 7 P's, strategies and forecasting6 subtopics

Unit 5: Operations Management - Production Methods, Production planning and management9 subtopics

BM Toolkit - Core business frameworks and tools15 subtopics

Balancing Efficiency with Preparedness

Just-in-Time (JIT): Efficiency at Its Core

Advantages of JIT

Disadvantages of JIT

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Excepteur sint occaecat cupidatat non proident

Unlock the rest of this chapter with a free account

Balancing Efficiency with Preparedness

Just-in-Time (JIT): Efficiency at Its Core

Advantages of JIT

Disadvantages of JIT

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Excepteur sint occaecat cupidatat non proident

Unlock the rest of this chapter with a free account