Question

Roger Corporation recently abandoned its traditional production and inventory system in favor of a just-in-time system. The company typically dealt with 50 suppliers and placed 450 orders throughout the year. All other things being equal, which of the following choices denotes a likely scenario under the just-in-time system?

Option 1: A decrease to 30 orders
Option 2: An increase to 500 orders
Option 3: A decrease to 400 orders
Option 4: An increase to 550 orders

Answer 1

Under a just-in-time inventory system, Roger Corporation is likely to see an increase to 550 orders since it typically requires more frequent deliveries with lower inventory levels.

Step-by-step explanation:

When Roger Corporation shifted to a just-in-time system after abandoning its traditional production and inventory system, the likely scenario would be an increase to 550 orders (Option 4). Just-in-time systems typically require more frequent deliveries to ensure that production has the necessary components without the need for large inventories. This approach focuses on reducing lead times and inventory levels, which often results in a higher number of smaller orders placed throughout the year to match production schedules more closely with customer demand. Therefore, the number of orders placed by Roger Corporation is likely to increase from the original 450 orders, reflecting a just-in-time system's need for more frequent resupply.