CAF-7 · Chapter 12 · Question 11 of 15
If a company successfully implements a 'Just-In-Time' (JIT) inventory management system, what will be the most immediate and direct impact on its working capital metrics?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Inventory holding days will dramatically decrease
Explanation
JIT involves purchasing raw materials exactly when they are needed for production and producing goods exactly when they are needed for sale. This virtually eliminates the need for holding stock, drastically reducing inventory holding days.
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