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Just in Case or Just in Time?

A comparison of the two methods of managing stock control

Martin Leigh

on 8 June 2017

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Transcript of Just in Case or Just in Time?

Just in Case or Just in Time?
Evaluate the benefits of each system
Why should the company use Just In Case?
What's so great about JIT?
What is Just in Case?
What is JIT?
The advantages of JIT is that if the stock is perishable, then it will not have to be stored, so it is not likely that the product will "go bad." Furthermore, there are cost benefits.
- Stocks of raw materials can be used to allow the firm to meet increases in demand by increasing the rate of production quickly.
- Raw material supply hold-ups will not lead to production stopping.
- Economies of scale from bulk discounts will reduce average costs.
- Stock of finished goods can be displayed to customers and increase the chance of sales.
- Stock of finished goods used to meet sudden, unpredicted increases in demand - customers can be satisfied without delay.
- Firms can stockpile completed goods to meet anticipated increases in demand as seasonal goods or products, such as toys at festival times.
-High opportunity costs of working capital tied up in stock
-High storage costs
-Risk of goods being damaged or becoming outdated
-Space used to store stock cannot be used for productive purposes
-"Getting it right the first time" is a key component of the production
Just in time is an inventory strategy that
strives to improve a businesses' return on investments
by reducing in process inventory and carrying costs. The method aims to avoid holding stocks by requiring supplies to arrive just as they are needed in production and completed products are produced to order
Just in case is holding high stock levels , there is a production problem or an unexpected upsurge in demand.
Another benefit has to do with waste. There’s an environmental benefit to JIT inventory management. By deliberately keeping stock low, businesses can reduce energy consumption as well as physical waste in the form of discarded stock.
The key benefit of JIT is associated with cost effectiveness. Cost savings are made primarily through lowering overheads and the reducing the potential for wasted or discarded stock. However, these cost savings can come at the expense of delayed order dispatches, which can negatively impact repeat business and business reputation.
• A lot of faith is placed in the reliability and flexibility of suppliers.
• Increased ordering and administration costs.
• Advantages of bulk buying may be lost. Vulnerable to a break in supply and machinery breakdowns.
• Difficult to cope with sharp increases in demand.
• Possible loss of reputation if customers are let down by late deliveries.
Full transcript