CIPS Exam L4M7 Topic 12 Question 63 Discussion

Actual exam question for CIPS's L4M7 exam

Question #: 63
Topic #: 12

[All L4M7 Questions]

The managing director requires action to be taken to improve the organization's profitability and has asked for suggestions to enable this to be achieved. The procurement manager has said that a just-in-time (JIT) system should be introduced. Would such a system improve profitability?

AYes, because it would reduce stock holding costs

BNo, because it would increase buffer stock

CNo, because it would increase stock holding costs

DYes, because it would reduce stock turn rates

Show Suggested Answer

Suggested Answer: A

Just-in-Time (JIT) inventory management minimizes stock levels by synchronizing orders with production schedules, which:

Reduces holding costs: Less inventory means lower costs for storage and management.

Increases cash flow: Reduced stock levels free up working capital.

Whole-life asset management supports JIT as a cost-saving measure, focusing on maintaining lean inventories while meeting production needs.

by Rodney at Aug 14, 2025, 01:06 AM

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