Directions

Respond to the following item and your colleagues as directed:

• In the past, inventory was often seen as a great asset, because it provided protection against uneven demand by maintaining "level" production. However, inventory can hide many problems. Today, inventory is seen as a liability, because it ties up capital resources that could be used elsewhere and it drives up costs by requiring additional handling, warehousing, and management resources. Identify a firm currently using a JIT system of materials management and describe the relationships between service level, uncertainty, safety stock, and order quantity in regards to inventory cost efficiency.