Question

Under a just-in-time inventory system, a company can reduce the amount of working capital it needs to finance inventory, freeing capital for other uses and/or lowering the total capital requirements of the enterprise.
a) true
b) false

Answer 1

Answer:

True.

Explanation:

Under a just-in-time inventory system, a company can reduce the amount of working capital it needs to finance inventory, freeing capital for other uses and/or lowering the total capital requirements of the enterprise.

In Business management, Just-in-time (JIT) is an inventory management method used by a company wherein goods, products, components, and labor are made available exactly when needed or just few hours before they are needed in the production process.

Basically, It is an inventory management system that companies use to reduce wastage to the barest minimum, thereby, freeing capital for other uses and/or lowering the total capital requirements of the enterprise.

Hence, just-in-time when used judiciously can help a company reduce the amount of working capital it needs to finance inventory management.