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


the advantages of globalisationdefine complementary goodsdistinguish between assets and liabilitiesdifference between revenue and capital expenditurehorizontal merger examplenationalization advantages and disadvantagesconglomerate integrationexample of inferior goods in economicswhat is the profitability ratiotypes of factoringconsignee vs consignorfdi and fiiadvantages and disadvantages of future contractshow to record unearned revenueorder cheque and bearer chequeadvantages and disadvantages of globalizationunearned rent incomeadvantages of authoritarian leadership styletypes of cheques crossingwhat is trial balance in hindifixed capital meaningadvantages and disadvantages of money market mutual fundsfmcg fullformpure competition marketppt on merchant bankingexamples of job costing and process costingadvantage of debit carddemand push inflationexamples of skimming pricinghorizontal merger examplenondurable goods listfinancial market segmentationcibil bankmerits of marginal costingfluctuating capital accountconglomerate diversification meaningfright means in hindiobjectives of demat accountsemi finished goods examplesmerits and demerits of social mediaadvantages and disadvantages of short term sources of financeunearned revenue journal entriesaccounting relevant costmeaning of balance sheet in hindimarginal costing systemdeclining balance method depreciationkinds of chequeprepaid insurance journal entrymateriality accounting principledisadvantages of advertisementsthe difference between socialism and capitalismconsumer nondurable goodsconglomerate merger examplewhat are liquid assets examplesfinancial market segmentationthe advantages and disadvantages of capitalismdefinition of unqualified audit opiniondifference between process costing and job costingadvantages and disadvantages of financial institutionsfeatures of decentralisationadvantages of debit cardwhat is the main difference between socialism and capitalismdisadvantages of advertisementmonopolistics competitiondiscounting a billadvantages and disadvantages of housing financecongeneric mergersunitary elastic examplewhat is asba in bankingadvantages of television advertisementdebit card disadvantagesmarket skimming pricing examplezero based budgeting advantages and disadvantagesadvantages of job costingaccounting materialityexplain the difference between fixed and variable costsa horizontal mergerstrap option strategydisadvantages of variable costing