Question

If a firm uses a just-in-time inventory system, what effect is that likely to have on the number and location of suppliers?

Short answer

The just-in-time system requires that there are few suppliers who are closely located.

Step-by-step solution

Meaning of just in time inventory system

The just-in-time inventory system refers to an inventory system where the organization receives goods as and when required. This system helps an organization in avoiding storage costs of inventory.

The number and location of suppliers in a just-in-time inventory system

In the just-in-time inventory system, the organization has a few suppliers and they are located close to the factory. This is a requirement to ensure that the organization can easily get the inventory at the time of usage.