Post by January $25$ Comment by January $28.$ Help each other out on the Q&A board.

This company YPSI trailer is planning to attempt to move to a JIT system. NOTE: I've filled in most of the excel sheet. For many of the columns you should be able to see the formula I used. Regarding JIT you can see that I calculated total cost $2$ different ways. You can ignore one. I did that just to show that the math works out the same either way.

The main tenets of JIT are:

Minimize inventory

delivery of inputs should be frequent and small

suppliers should be treated as part of the production team.

Zero defect goal

Finished product has a very short lead time

Inventory carrying costs are assumed to be $20\%$ per yr on the average investment in inventory on hand $($including acquisition and transport costs$)$

Number of units currently kept in stock is calculated by:

$2.$ If the vendor is more than $500$ miles away$-$ a safety stock of $4$ weeks material

$[?]$ Vendors $100-500$ miles away $-$ safety stock of $2$ weeks of material is kept

$[?$ Closer sources $-$ safety stock of $1$ week

Besides safety stock, the average inventory of any item is the current lot size divided by $2.$

Regarding the excel sheet and the switch from a traditional system to JIT.

A$.$ How will this affect shipping prices, especially for those suppliers who are further away?

B$.$ What is the total annual cost of maintaining the current system?

C$.$ What would it be if they switched to JIT $($assuming no safety stock$)?$

D$.$ What other costs or benefits should they consider with JIT?

E$.$ What changes should occur between YPSI and their suppliers?