JIT/EOQ/ROP Interrelationships

Author: Client Uploads

March 3rd, 2021

The just-in-time (JIT) movement has long argued that firms should: Maximize their process flexibility so that ordering costs are minimal. Stabilize demand levels. Shrink lead times as much as possible. Assign much higher holding costs to inventory than has traditionally been the case. Using the economic order quantity (EOQ) and reorder point (ROP) formulas, explain how such efforts would be consistent with JIT’s push for lower inventory levels.

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