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H&M has adopted the inventory management system that delivers less merchandise on a more frequent basis than in traditional inventory systems. The firm gets the merchandise just in time for it to be used in the manufacture of another product or for sale when the customer wants it. This is an example of a(n) ___________ inventory system.

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Answer:

Explanation:

Just in time or JIT is an inventory management strategy that aims at availing goods or raw materials when they are needed for production. JIT aligns materials delivery schedules with the production timetable. This strategy increases efficiency and reduces wastage by ordering goods only when they are required.

For just in time strategy to be successful, a business must have reliable suppliers. Purchasing inventory in bulk holds a lot of capital. By implementing JIT, a company will manage its cash flow better. JIT helps reduces wastage as items stored in bulk are likely to get damaged or lost.

H&M has adopted a Just in time inventory management strategy due to the low level of merchandise held. Frequent ordering suggests that the orders are based on requirements. H&M must be keen on its order management strategy to avoids the risks of frequent stock-outs.

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The right answer from the statement is Just in time .

Further explanation

Just In Time or often abbreviated as JIT is a production system that is used to meet customer needs on time by the amount desired. The purpose of the Just In Time production system is to avoid the occurrence of excess quantity/amount in production (overproduction), excess inventory and also waste in waiting time. With the JIT system, we have been able to overcome 3 wastes (overproduction, excess inventory and waiting)

Many advantages can be enjoyed in implementing the Just In Time production system, including the following:

  1. Low inventory level or stock level, thus saving storage space and related costs such as rental fees and insurance costs.
  2. Production materials are only obtained when needed so that only requires low working capital.
  3. With a low level of supply, the possibility of waste due to outdated expired and damaged or obsolete products will be lower.
  4. Avoid the buildup of unsold products due to sudden changes in demand.
  5. Requires an emphasis on the quality of production materials supplied by the Supplier so that it can reduce inspection and rework times.

Although there are many advantages to be had, this Just In Time Production System still has weaknesses, namely:

  1. The Just In Time Production System does not have a tolerance for mistakes or "Zero Tolerance for mistakes" so it will be very difficult to make repairs/rework on production materials or finished products that have defects. This is because the level of inventory of production materials and finished products is very minimum.
  2. Very high dependence on Suppliers both in quality and on-time delivery which is generally outside the scope of the manufacturing company concerned. Late delivery by one supplier will result in delays in all planned production schedules.
  3. Transaction costs will be relatively high due to the high frequency of transactions.
  4. The manufacturing company concerned will find it difficult to meet the sudden high demand because in reality there are no more finished products.

Learn more

Just in time https://brainly.com/question/2334798, https://brainly.com/question/14173968

Details

Class: High School

Subject: Business

Keyword: a kind of inventory management system.

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