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The accounts of Wizard Pinball Manufacturing Pty Ltd include the following information - HSC - SSCE Business Studies - Question 23 - 2004 - Paper 1
Question 23
The accounts of Wizard Pinball Manufacturing Pty Ltd include the following information. (S) Accounts Payable 180 000 Accounts Receivable 80 000 Cash 20 000 Intangi... show full transcript
Worked Solution & Example Answer:The accounts of Wizard Pinball Manufacturing Pty Ltd include the following information - HSC - SSCE Business Studies - Question 23 - 2004 - Paper 1
Step 1
Describe ONE method that could be used to control inventory at Wizard Pinball Manufacturing Pty Ltd.
Answer
One effective method to control inventory at Wizard Pinball Manufacturing Pty Ltd is to implement a Just-In-Time (JIT) inventory system.
Just-In-Time (JIT) Inventory System:
JIT inventory management aims to minimize inventory holding costs by receiving goods only as they are needed in the production process.
Advantages of JIT:
- Reduces Storage Costs: By keeping inventory levels low, the company can reduce the costs associated with warehousing and inventory management.
- Improves Cash Flow: Less money is tied up in inventory, which can be used in other areas of the business.
- Minimizes Waste: With JIT, the likelihood of overproduction and obsolescence is significantly reduced, leading to more efficient production processes.
To effectively implement a JIT system, Wizard Pinball Manufacturing Pty Ltd would need to establish strong relationships with suppliers and ensure timely production schedules.