Question

Collier Company has implemented a just-in-time system, which relies on suppliers to deliver goods for resale as needed. This implementation is most consistent with which of the following basic principles of cash management? Increasing the speed of receivables collection. Planning the timing of major expenditures. Delaying the payment of liabilities. Keeping inventory levels low.

Answer 1

Option D. Keeping inventory levels low

Step-by-step explanation:

The reason is that Just in time system was first introduced in the Japan to lower the inventory level to almost zero to gain cost advantage over the rival companies and also to increase the competitiveness of the domestic products because they are now incurring insignificant cost on the inventory management. This system was introduced to lower the warehouse cost and holding cost by keeping the inventory levels so low that it gives cost advantage.