A tradeoff analysis of Just-In-Time and non Just-In-Time inventory with transportation ramifications

Abstract

The purpose of this research is to investigate when a Just-In-Time (JIT) inventory management technique is a worthwhile approach to managing inventories. Some experts in the field maintain that the additional transportation costs derived from using JIT and its costs due to frequent shipping is more than offset by the reduction in inventory levels. In this study a simulation is developed using the cost structure of Naval Air Station Lemoore for managing a selected group of items. Lemoore is considered the Inventory Control Point and the Stock Point for those items. Research results indicate that despite all the advantages of using JIT, JIT is not always the lowest cost approach. Recommendations are that inventory managers delineate the associated costs using each technique and perform a thorough analysis that compares the two alternatives, and that JIT is not a general solution leading to the lowest cost for management of all inventory items.