3.2 JIT + JIC Advantages and Disadvantages

Just-in-time: Advantages & disadvantages

Advantages of just-in-time

• •Low stockholding costs as it minimises the stock held
• •Does not need as much space to store stock
• •Less danger of theft or having to reduce price to sell the stock

Disadvantages of just-in-time

• •Buy small quantities so less likely to get bulk discount (economies of scale); more transport costs for more frequent deliveries
• •At risk if there are difficulties with suppliers

Just-in-case: Advantages & disadvantages

Advantages of just-in-case

• •Can meet sudden increases in demand as has spare stock
• •Lower risk if there are problems with suppliers
• •Buy bigger quantities and may get price reductions (bulk discount); less transport costs as less frequent deliveries

Disadvantages of just-in-case

• •Holds stock that might go out of date or need to have price reduced to sell
• •Higher stock-holding costs as it hold stocks just in case of an increase in demand or problems with suppliers