Question

A firm fills its customer's orders from finished goods inventory. It is ________?

1) Just in Time (JIT) inventory system
2) First In, First Out (FIFO) inventory system
3) Last In, First Out (LIFO) inventory system
4) Economic Order Quantity (EOQ) inventory system

Answer 1

The firm fills its customer's orders from finished goods inventory using a Just in Time (JIT) inventory system.

Step-by-step explanation:

The correct answer is 1) Just in Time (JIT) inventory system.

In a Just in Time (JIT) inventory system, the firm fills its customer's orders from finished goods inventory. JIT is a system where inventory is kept minimal, and products are produced and delivered as needed. This helps reduce inventory holding costs and improves efficiency in the production process.

An example of a firm using JIT is a fast-food restaurant that prepares food as orders come in, rather than pre-cooking and holding the food in inventory.