Which of the following is NOT a benefit of just-in-time (JIT) inventory management?

Just-in-time (JIT) inventory management is a strategic approach aimed at reducing waste and increasing efficiency by receiving goods only as they are needed in the production process. This method offers several benefits, including a reduction in holding costs, which are the costs associated with storing unsold goods. By minimizing inventory levels, businesses can better allocate their resources and enhance profitability.

Improved cash flow is another key advantage of JIT. By reducing the amount of capital tied up in excess inventory, companies can free up funds that can be used for other investments, ultimately strengthening their financial position.

Additionally, JIT can lead to enhanced supplier relationships. In a JIT system, businesses often establish partnerships with suppliers to ensure timely delivery of materials. This close collaboration can result in better communication and increased reliability, benefiting both parties involved.

In this context, the increased risk of stockouts is indeed not a benefit of JIT. Although JIT aims to eliminate excess inventory, it may lead to vulnerabilities if demand fluctuates unexpectedly or if there are delays in supply chain processes. This heightened risk of running out of stock can negatively impact production and customer satisfaction, distinguishing it from the other options that reflect positive outcomes of JIT methodology.