An analysticl Comparison of JIT and EOQ Inventory System when considering the System Implementing Cost of JIT

• Main Authors: Yu-chi Liang, 梁毓琪
• Other Authors: Chun-cheng Li
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/90092192532256015154

碩士 === 東吳大學 === 會計學系 === 94 === Just-in-time (JIT) inventory system has been proved to have many benefits, such as saving inventory holding costs, reducing ordering costs, improving quality, eliminating wasting, streamlining the production process, and eliminating production process bottlenecks. Also, JIT can response customer’s demand quickly, setup production equipment within few minutes, satisfy variable and fast demand from today’s customer. All of these facets has becoming a necessary crisitic successful factors in today’s business environment. From inventory research literature, many studies have pointed out that JIT encompass more advantages than Economic Ordering Quantity (EOQ) model. EOQ can still be an popular inventory management concept is, perhap, that it is an easily understanding instrument. Thus far, the comparision research of EOQ and JIT inventory model all neglect to consider the investment cost when switching inventory system from EOQ to JIT. When consider JIT control of inventory, one must make sure that benefit arising from inventory cost saving must be greater than cost of investment . This paper will revise the comparative model presented by Fazel et al. to include the implementing cost and the saving warehousing cost of introducing JIT system to make it more satisfying to realistic inventory management environment. We propose a modified mathematics model to asist the choosing decision between EOQ and JIT system. A mathematical model has been developed to compare the total relevant cost of EOQ and JIT system, in that we can get the optimal setup cost, optimal investment cost and optimal total cost in JIT purchase system. Finally, we present a numerical example and implement some sensitive analyses to demonstrate the model application.