Which one of the following statements is true regarding JIT inventory?

A) It exists just in case something goes wrong.

B) It hides variability.

C) It is the minimum inventory necessary to keep a perfect system running.

D) It is minimized with large lot production

The correct answer is letter "C": It is the minimum inventory necessary to keep a perfect system running.

Explanation:

Just in Time (JIT) inventory is a system of supplying goods as close as possible to when they are needed. For a company that resells, this means goods arrive just before hitting the shelves for customer purchases. For a manufacturing company, it means part and raw materials arrive just before they are added to the final product.

Keeping less inventory on hand means a company has more available cash and credit for other users.