The Logistics-Costs Analysis of JIT
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When the optimum delivery size and frequency is calculated for any particular input or output linkage, the total logistics costs of that particular linkage are at a minimum. Given all the various parameters, the traditional Western purchasing approach would suggest that there is no reason to diverge from this situation unless one of the parameters changes. However, the JIT approach argues that the size of Q should be reduced to the lowest value possible. The reason for this lies in the rationale behind the theory of JIT manufacturing, and centres on primarily on the issue of ‘quality costs’.
KeywordsEconomic Order Quantity Logistics Cost Quality Cost Input Inventory Supply Firm
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