JUST-IN-TIME IN KALAMAZOO
Question 1: What is the total annual cost of maintaining the components inventory under the present system?
Question 2: What would be the total annual cost of maintaining the components inventory under the JIT system (assuming no safety stocks)?
Question 3: Should Ballenger take into account any other costs or benefits from the JIT system? If so, what are they?
Question 4: If the JIT system is adopted, are there safety stocks of any item that should be maintained? If so, which ones, and how much?
Question 5: If the JIT system is adopted, what changes, if any, should occur in the relationships between Ballenger’s firm and his suppliers of components? Discuss.
Question 6: Assume that Ballenger has switched to the JIT system and that he receives a surprise phone call from a competitor who is going out of business. The competitor wants to sell Ballenger 7,000 dome lights of the type listed on Exhibit 3-C. Should Ballenger buy them? If so, at what price?
Question 7: Carrying costs are 20%. Is there a level of carrying costs at which both Ballenger’s present system and a JIT system have similar costs? If so, what is it?
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