Just In Time Inventory Practices Term Paper

Length: 4 pages Sources: 4 Subject: Business - Management Type: Term Paper Paper: #76007944 Related Topics: Practice Calculations, Inventory System, Inventory Management, Scientific Management
Excerpt from Term Paper :

JIT Management

Eli Whitney developed the interchangeable parts system when accepting a contract to manufacture muskets for the U.S. Army in 1799 (A Brief History of (Just-In) Time). Over the next 100 years, large scale processes held focus while manufacturers focused on individual technologies. The system of engineering drawing developed and modern tools were perfected during this time.

In the late 1890s, Fredrick W. Taylor created "Scientific Management" by observing workers and work methods, then implementing Time Study and standardized work. Frank Gilbreth added Motion Study and invented Process Charting, which focused on all work elements, including non-value added elements. Lilian Gilbreth added the study of motivations of workers and how attitudes affected the outcome of processes. These three originated the idea of eliminating waste.

Around 1910, Henry Ford and Charles E. Scrensen created the first comprehensive Manufacturing Strategy. Ford is considered to be the first practitioner of Just In Time and Lean Manufacturing strategies. In the 1930s, Alfred P. Slogan developed business and manufacturing strategies for managing large processes and dealing with variety.

Just-In-Time refers to manufacturing and conveyance of only what is needed, when it is needed, and the amount needed at a specific time (Toyota Production System Terms). It operates on three principles of the pull system, continuous flow processing, and takt time. The pull production system is the concept that each manufacturing component must be in line with another department to build the final product (Pull Production - Understanding Kanban: Extended Entry). It is controlled by management authorization to produce or not and uses visual aids to show progress and control the movement between work stations. The pull system starts with low levels of stock based on demand in needing the product, usually a number of days, and purchases are only made at a need to purchase level indicated by the management.

The continuous flow processing is designed to improve environment...

...

Continuous flow processing identifies the processes involved to improve the processes for greater efficiency. It eliminates waste in materials and labor. The takt time is the time needed to produce one unit. It involves straight work time divided by the number of required units of production based on demand.

Economic Order-Quantity Decision Model, EOQ, determines how much of a product to order under a given set of assumptions (Horngren, 2006). EOQ assumes there are only ordering and carrying costs, the same quantity is ordered at each reorder point, demand, ordering costs, and carrying costs are known with certainty, purchasing cost per unit is unaffected by the quantity ordered, no stock outs occur, and costs of quality only to the extent that these costs affect ordering and carrying costs are considered. The reorder point triggers a new purchase and is computed by the number of units sold per unit of time times the purchase order lead time. Where EOQ assumes the demand and lead time are known with certainty, in cases of uncertainty, safety stock can be used as a buffer against unexpected increases in demand, uncertainty of lead time, and unavailability of stock from suppliers.

EOQ calculated order quantity can be different than the manager's choice of best performance due to the fact that EOQ ignores carrying costs. As a result of ignoring the carrying costs, managers would be inclined to order more. To achieve the optimal level between the two calculations, performance-evaluation models charge managers with carrying costs that require a certain level of return on investment.

Using EOQ parameters with JIT purchasing, companies establish long-term purchase agreements that define price and quality terms over an extended period. Individual orders are covered by the purchase…

Sources Used in Documents:

Bibliography

A Brief History of (Just-In) Time. (n.d.). Retrieved from Strategos: http://www.strategosinc.com/just_in_time.htm

Broyles, D.B. (2005, Apr). Just-In-Time Inventory Management Strategy & Lean Manufacturing. Retrieved from Academic Mind: http://academicmind.com/unpublished/papers/business/operationsmanagement/2005-04-0000aaf-just-in-time-inventory-management.html

Case Study 5: A Continuous-Flow System for Reusing Microetchant. (n.d.). Retrieved from EPA: http://www.epa.gov/dfe/pubs/case_stu/case5/index.html

Horngren, C.T. (2006). Cost Accounting: A Managerial Emphasis, p. 692. Upper Saddle River, NJ: Pearson Prentice Hall.


Cite this Document:

"Just In Time Inventory Practices" (2012, December 02) Retrieved September 18, 2021, from
https://www.paperdue.com/essay/just-in-time-inventory-practices-106360

"Just In Time Inventory Practices" 02 December 2012. Web.18 September. 2021. <
https://www.paperdue.com/essay/just-in-time-inventory-practices-106360>

"Just In Time Inventory Practices", 02 December 2012, Accessed.18 September. 2021,
https://www.paperdue.com/essay/just-in-time-inventory-practices-106360

Purpose of Paperdue.com

The documents we provide are to be used as a sample, template, outline, guideline in helping you write your own paper, not to be used for academic credit. All users must abide by our "Student Honor Code" or you will be restricted access to our website.

Related Documents
SCM As a Method of Inventory Control
Words: 2494 Length: 8 Pages Topic: Business Paper #: 17825677

SCM as a Method of Inventory Control SCM and Inventory Control This paper examines the use of supply chain management (SCM) as a tool for inventory control. SCM, which coordinates and integrates the activities of supply chain members, plays an increasingly important role in companies' reducing their costs and making better informed decisions. Companies benefit from SCM and inventory control by better meeting customer demands for product availability and pricing, and by

Inventory Management and Control at Costco
Words: 1359 Length: 4 Pages Topic: Accounting Paper #: 64704476

Costco Programs, Budgets and Procedures Costco's approach to financial improvement will come in the form of a two-pronged strategy. The first is to increase inventory turnover, and the second will come in the form of increasing market share. Inventory turnover is a standard ratio that refers to "how many times a company's inventory is sold and replaced over a period of time," ("Inventory Turnover," (n.d.). Increasing market share usually depends on a

Inventory Management the Raw Materials,
Words: 12443 Length: 40 Pages Topic: Business - Management Paper #: 1685621

52). The researcher handles or controls the items differently. It is a form of Pareto analysis where items such as customers, documents, activities, inventory items, sales territories grouped into three categories namely a, B, and C. In order of their estimated importance. Consequently, 'A' items are very important, 'B' items are important, and 'C' items are marginally important. The organization gives 'A' rating to their best customers since they

Inventory and Supply Chain Management:
Words: 844 Length: 3 Pages Topic: Business - Management Paper #: 75704422

As is shown in the case, CCBCC begins with an intensive commitment to the initial collaborative planning phases of ensuring front end alignment with their distribution channel partners. Joint business plans ensure the company has the ability to effectively plan for spikes in demand more effectively than traditional, and less flexible means allow for. The collaborative planning phase of the CPFR Model is essential for ensuring a high degree

Inventory Management Business Entities, Whether
Words: 2998 Length: 10 Pages Topic: Business Paper #: 97338314

In analyzing a Company, we can also compute its gross profit ratio and return on sales. Gross profit ratio is computed by dividing gross profit with sales and return on sales is computed by dividing net income by sales. Respectively, 2006 and 2005 ratios of ABC Company are as follows: 39% and 38% in gross profit; and 16% and 15% in return on sales. Other quantitative measurement of its liquidity is

Inventory Policy Controlling Inventory Is a Control
Words: 1741 Length: 4 Pages Topic: Business Paper #: 7415517

Inventory Policy Controlling inventory is a control of 45% to 90% of all expenses related to business is very important also to see that the business has the correct goods on hand so that it does not get into stock-outs, or shrinkage of inventory due to spoilage or theft, and helps in providing a correct accounting. When inventory is not maintained properly, then the major part of the assets of a