In Reply to Parent Post by Eng. Lutfi
Greetings every body
May any of you provide me with some disadvantages of JIT (Just in Time) model?
Thank you in deed!
The idea of JIT evolves from inventory management. I need to balance three costs - the cost of holding and processing inventory with the expected cost of having a "stockout" (you need the part, but don't have it, and now everything is stopped until you can get the part), and the cost of processing orders for parts. Two primary things affect the probability of a stockout - how variable is the demand for the part, and how variable is the delivery schedule for the part. The cost of ordering parts (administrative, overhead) tends to cause you to order infrequent, large batches, but this increases inventory holding costs.
So, if you can get your administrative costs down such that you can make frequent, small orders (or establish a very regular delivery schedule) and if you can predict the demand for the parts with little error, then it is worth going JIT. The opposite becomes the downside of JIT. If you don't have predictable demand, you may easily end up with a shortage of a part and have a work stoppage. If you administrative costs are high, it becomes cost prohibitive to make frequent, small orders. If you can't control the delivery schedule (especially if they are from a vendor) then you will likely have a parts shortage develop some day.
JIT is one answer to optimizing inventory and stockout costs. If your conditions don't allow for JIT, then the true optimum lies with a different inventory control policy.