5 A firm switches to a JIT inventory management system Expla

5. A firm switches to a JIT inventory management system. Explain how this will impact their inventory turnover ratio.

Solution

A just in time approach states that firm produce goods only when it is ordered by a customer. If there are no customer production of goods will be stopped.

As there will be low inventory it will automatically improve turnover ratio it will help to look company more efficient.

Higher the inventory turnover ratio helps business to represent themselves that they are working with efficiency.

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