The drawback of a just-in-time inventory system is that it leaves a fi

QUESTION

The drawback of a just-in-time inventory system is that it leaves a firm with excess unsold inventory that it has to write off against earnings or price low to sell.

Indicate whether the statement is true or false.

ANSWER

FALSE
The drawback of a just-in-time inventory system is that it leaves a firm without a buffer stock of inventory. Although buffer stocks are expensive to store, they can help a firm respond quickly to increases in demand and tide a firm over shortages brought about by disruption among suppliers.