Advantages and Disadvantages of Just in Time

Just in time is an inventory management strategy which is used by the manufacturing companies so that these companies can reduce their cost of production. Under this strategy company does not hold inventories rather they produce as the demand for product arises. Just in time strategy has both advantages and disadvantages let’s look at both of them –

Advantages of Just in Time

  1. Just in time makes possible for the companies to use the cash for other productive purpose which would have been otherwise tied in the inventory.
  2. Since company buys the raw materials when there is need for it, company can have the advantage of buying the raw materials at lower price if the prices have reduced and also there is no risk of wastage of raw materials leading to cost saving for the company.
  3. Under this strategy company has more space as there is no inventory and therefore there is no requirement for storage and that vacant space can be used by the company for other productive purpose.

Disadvantages of Just in Time

  1. This strategy may lead to embarrassment for the company since if the company is not able to produce the product on time, it can have far reaching consequences on the goodwill of the company.
  2. Company is more dependent on the supplier of raw materials under this strategy and therefore chances of supplier exploiting the company increases when there is urgent need for raw material.
0 comments… add one

Leave a Comment


Related pages


benefits of a swot analysisautocratic managementover absorption of overheadsjournal entry to record deferred revenuepenetration pricing examplesfounder of icici bankinternet demeritscapital recieptbranding advantages and disadvantagessubstitutes in economics definitionmixed economy tagalogfictitious assets definitiondifference between current ratio and quick ratiomanaged float currencyaccounting fifo methodfeatures of consignmentdefinition of profitability ratioswhat is the difference between accounts receivable and accounts payablewhat is slr and crradvantage of fifo methodwhat is systematic risk and unsystematic riskconsignee vs consignordisadvantages of hedge fundsprepaid journal entryhorizontal mergers examplescomplementary goods and substitute goodsmarket skimming strategyadvantages and disadvantages of socialismdefinition of inferior goods in economicsfactors influencing income elasticity of demanddevaluation of moneyunearned fees journal entrymeaning of advantage in hindideflation economics helpexamples of veblen goodsunearned income accountingcost oriented pricingprepaid asset journal entrycurrent asset turnover ratiodisadvantages of traditional economypayback method advantagesadvance from customer journal entryadvantages and disadvantages of importingdefine prestige pricingwhat is a withdrawal slipfull convertibility of currencyexample of conglomerate mergerdifferent kinds of factoringcash flow statement easy explanationdifference between account receivable and account payableexample of a conglomerateadvantage and disadvantage of mixed economic systemnegatives of capitalismlocational arbitrage exampledividend policies of companiesmonopolistic compadvantages of dcfppf fullformadvantages and disadvantages of lifo and fifo in accountingunsystematic riskwhat is vertical mergermonopolistic competitionsadvantages of currency devaluationhorizontal takeoverdecentralization of authorityadvantages and disadvantages of income statementdisadvantage of payback perioddifference between creditor and debtorperfect monopolistic competitionadvantages of a mixed economic systemprepaid expense journal entryexamples of direct and indirect quotes