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CIPS L4M7 Exam - Topic 12 Question 63 Discussion

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?
A) Yes, because it would reduce stock holding costs
B) No, because it would increase buffer stock
C) No, because it would increase stock holding costs
D) Yes, because it would reduce stock turn rates

CIPS L4M7 Exam - 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?

Show Suggested Answer Hide 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
7 months ago
Not sure about that, JIT can be risky if demand spikes.
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Alyce
7 months ago
Definitely agree, less stock means less waste!
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Celestina
7 months ago
Wait, wouldn't that mean we risk running out of stock?
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Lenita
7 months ago
I think it might actually raise costs with more deliveries.
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Pansy
8 months ago
JIT can cut down on storage costs!
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Belen
8 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
8 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
8 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
9 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
9 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
9 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
9 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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Adolph
9 months ago
I'm pretty confident that a JIT system would improve profitability by reducing stock holding costs, so I'm leaning towards option A.
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Arlen
10 months ago
Yes, but overall it would still reduce costs and improve efficiency.
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Janey
10 months ago
But wouldn't it increase buffer stock as well?
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Keshia
10 months ago
I agree with Glory, it would reduce stock holding costs.
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Glory
10 months ago
I think a JIT system would definitely improve profitability.
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