Just In Time (JIT) is “an inventory strategy implemented to improve the profit of a business by reducing in-process inventory and its associated costs” (Wikipedia, 2007). JIT is a management philosophy and is operated under the quality control system. “It has been widely implemented in manufacturing industries as a survival strategy against global market competition” (Projogo & Johnston, 2007). “The most common industry using JIT manufacturing is the automobile industries. However, many other companies of all sizes and products are currently using and transitioning to just-in-time manufacturing” (Frazier, 2004).
“JIT system was first used by the Ford Motor Company and was subsequently adopted and publicized by Toyota Motor Corporation of Japan as part of its Toyota Production System. Japanese corporations can not afford large amounts of land to warehouse finished products and parts. Before the 1950s, this was thought to be a disadvantage because it forced the production lot size below the economic lot size. (An economic lot size is the number of identical products that should be produced, given the cost of changing the production process over to another product.) The undesirable result was poor return on investment for a factory. The chief engineer at Toyota in the 1950s, Taiichi Ohno, examined accounting assumptions and realized that another method was possible. The factory could implement JIT which would require it to be made more flexible and reduce the overhead costs of retooling and thereby reduce the economic lot size to fit the available warehouse space. JIT is now regarded by Ohno as one of the two ‘pillars’ of the Toyota Production System” (Wikipedia, 2007). “Toyota was able to meet the increasing challenges for survival through an appro ...