Which inventory approach orders products as needed to meet demand?

Which inventory approach orders products as needed to meet demand?

• A. Just in Time Method
• B. Open to Buy Method
• C. Min/Max Method
• D. E-Procurement

Answer: (A)

The idea being tested is a pull-based inventory system where orders are triggered by actual demand rather than forecasted needs. Just-in-Time (JIT) is exactly that: you order or produce only what is needed to meet current demand, so on-hand inventory stays minimal and items arrive just as they’re required. This approach reduces carrying costs, minimizes waste, and relies on reliable suppliers, precise demand signals (often using Kanban or similar triggers), and short, predictable lead times. If demand shifts or supply is disrupted, stockouts can occur because there isn’t extra buffer stock. Other methods don’t describe this exact timing and flow. Open to Buy budgeting focuses on purchasing within a planned expenditure; Min/Max relies on predefined stock levels with safety stock; E-Procurement is about the electronic process of purchasing. None of these specify ordering strictly as demand arises in the way Just-in-Time does.

The idea being tested is a pull-based inventory system where orders are triggered by actual demand rather than forecasted needs. Just-in-Time (JIT) is exactly that: you order or produce only what is needed to meet current demand, so on-hand inventory stays minimal and items arrive just as they’re required. This approach reduces carrying costs, minimizes waste, and relies on reliable suppliers, precise demand signals (often using Kanban or similar triggers), and short, predictable lead times. If demand shifts or supply is disrupted, stockouts can occur because there isn’t extra buffer stock.

Other methods don’t describe this exact timing and flow. Open to Buy budgeting focuses on purchasing within a planned expenditure; Min/Max relies on predefined stock levels with safety stock; E-Procurement is about the electronic process of purchasing. None of these specify ordering strictly as demand arises in the way Just-in-Time does.