Question: JIT/EOQ/ROP Interrelationships

Discussion Question: The just-in-time (JIT) movement has long argued that firms should:

Maximize their process flexibility so that ordering costs are minimal.

Stabilize demand levels.

Shrink lead times as much as possible.

Assign much higher holding costs to inventory than has traditionally been the case.

Using the economic order quantity (EOQ) and reorder point (ROP) formulas, explain how such efforts would be consistent with JIT's push for lower inventory levels.

REFERENCE

Bozarth, C.C. and Handfield, R.B. (2012). Introduction to operations and supply chain management (3rd ed.). Upper Saddle River, New Jersey: Pearson Prentice Hall. CH 10, CH 11, CH 12