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Comparing and Contrasting JIT and EOQ Inventory Management System

            The Economic Order Quantity (EOQ) refers to the least quantity of inventory kept for fulfilling the demands of customers while just in time (JIT) is the management approach that brings together raw material order suppliers and production schedules. The two concepts differ in various ways as described in the table below.

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The Just in Time (JIT) approach to inventory management control has become most common in certain industries for various reasons. First, the system ensures that most industries achieve a uniform production process. Precisely, by ensuring that materials from the suppliers are delivered promptly to the industries and the final products from industries delivered to customers, JIT averts fluctuation in the production rates. Secondly, JIT approach to inventory management control is prevalent among industries because the approach ensures that full method is adopted. Full method enables industries to produce goods in every level only when such products are required in the next level. This assists companies to eradicate the inventory between production steps and minimizes the waiting time. Moreover, the pull method also help industries prevent wastage because of the defective products because in every stage, the output is inspected first before it they proceed to the next step.

The JIT approach to inventory management control has become most common in some industries because in JIT system, materials are bought only when they are produced and this assists such industries to completely eliminate their stock holding of the inventory of raw materials. This results in promptly produced finished products. Moreover, JIT has stringent norms to routine maintenance timetables. Principally, the preventive maintenance of equipment assists industries and companies to avoid costly maintenance in case of the machine breakdown.

Although JIT is a popular management approach or tool, it should not be embraced by all inventory managers because its success strategy majorly depends on the proper coordination between the supplier and the business. This ensures prompt delivery of goods. In certain situations especially when there is a delay in the delivery of raw materials, the production is likely to be hindered. Secondly, although JIT can reduce the inventory cost and enhance efficiency, it should not be adopted by every inventory manager because it can cause the demand and supply shocks thereby affecting the performance and operation of the entire industry and organization. When there is an increase in the demand of products, the lack of inventory of raw materials in production is likely to hinder the final rate of production. Further, JIT requires huge investment in information technology system to generate prompt messages to individuals supplying raw materials. As such, companies or managers that have budget constraints in such systems will be unable to adopt such systems.