Question

Computer maker Dell realized the problems with keeping large inventories, especially because of the fast rate of obsolescence of electronics components. Dell now keeps only about two hours of inventory in its factories.

The company is most likely using a ________ system. a) just-in-time inventory managementb) vendor-managed inventoryc) just-in-case inventory managementd) customer-managed inventorye) scan-based trading

Answer 1

a) just-in-time inventory management

Step-by-step explanation:

Just-in-time inventory management system keeps minimum quantities of inventories in the stores. Under JIT, a business purchases the material it requires for its current productions. JIT's objectives are to reduces the cost of holding stocks. It also minimizes wastage associated with keeping a high volume of inventories such as spoilage, theft, and obsolesces.

Dell Computers is holding low volume of stocks. It implies its production is dependent on market demand. By adopting JIT, Dell will solve the challenge of obsolesce as it will not keep high volumes of products in the stores. Dell Computers will have to develop a system of forecasting demand to avoid stock-outs.