Answer:
The very purpose of JIT
is to reduce inventory at all places in the supply chain. Inventory is
considered a waste because inventory is created by using materials, machines,
and efforts of persons. All of these are resources which have already been used
up and that portion of it which is not consumed and sent up the value chain
causes a drag in the system.
However, inventories are
inevitable because uncertainties exist at every stage, making it necessary to
provide a buffer so that demands do not go unfilled. The challenge is to keep
it to the minimum. To make this happen, the calculations involving the
following are necessary:
o
Forecasts
of the market demand
o
Capacities
of the equipments
o
Worker
absenteeism
o
Supplier’s
lead times
o
Quality
of the produced components