CIPS L4M7 Exam - Topic 12 Question 63 Discussion

Actual exam question for CIPS's L4M7 exam

Question #: 63
Topic #: 12

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, 12:06 AM

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Minna

5 months ago

Not sure about that, JIT can be risky if demand spikes.

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Alyce

5 months ago

Definitely agree, less stock means less waste!

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Celestina

6 months ago

Wait, wouldn't that mean we risk running out of stock?

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Lenita

6 months ago

I think it might actually raise costs with more deliveries.

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Pansy

6 months ago

JIT can cut down on storage costs!

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Belen

6 months ago

I feel confused about the stock turn rates mentioned in option D; I thought JIT was supposed to improve that, not reduce it.

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Luisa

7 months ago

I practiced a similar question, and I think reducing stock holding costs is a key benefit of JIT, so I would lean towards option A.

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Chanel

7 months ago

I'm not entirely sure, but I thought JIT could lead to increased buffer stock in some cases, which might contradict its purpose.

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Leontine

7 months ago

I remember studying JIT systems and how they can lower stock holding costs, so I think option A makes sense.

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Novella

7 months ago

I remember learning about JIT in class, and I believe it's supposed to improve efficiency and reduce waste. So I'm thinking option A is the right answer, but I'll double-check my notes just to be sure.

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Irma

7 months ago

Okay, let me see. A JIT system is supposed to reduce inventory, which could lower costs. But it might also increase buffer stock, which could offset the savings. I think I'll go with option B for now.

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Micah

8 months ago

Hmm, I'm a bit unsure about this one. The question mentions that the procurement manager suggested a JIT system, but I'm not sure if that would actually increase profitability. I'll have to think it through carefully.

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