Monday at Mill Lane: Every Monday a lorry from Valley Grain drops a week of flour at the Mill Lane bakehouse: 175 sacks, stacked in a wall beside the mixers. By Sunday night the wall is almost gone, and the lorry comes again.
The bread is different. It is never stored. It is baked from 2 a.m., leaves in the vans at five and is sold the same day.
That bread is made just-in-time (JIT). Nothing is made until it is needed, and what is made goes straight out.
JIT means materials are ordered to arrive just before they are used, and goods are made to order and sent out as soon as they are ready. The business holds little or no stock at any stage.
Just-in-time, from the lorry to the customer
Orders come in
At eight each evening the shops send their sales figures. That tells Priti how many loaves to bake tonight.
Materials arrive just before use
Under JIT, the flour for tonight arrives this afternoon: just enough, and no more.
Made to the order
Priti and the bakers bake to the shops' numbers from 2 a.m., not to a guess.
Sent straight out
The vans leave at five and the loaves are sold that day. No finished bread waits in a store.
JIT is a lean method: Earlier you met lean production: less waste and greater efficiency. Holding too much stock is one of its wastes.
JIT is the lean method aimed at that waste. It keeps only what the next stage of production needs.
The bread is already made just-in-time. The flour is not. Valley Grain has offered to deliver every afternoon instead of every Monday: 25 sacks at a time, enough for one night's 1,240 loaves. Small loads cost more to deliver, so the price would rise from $20.00 to $20.40 a sack.
| Flour at Mill Lane | Now: weekly delivery | JIT: daily delivery |
|---|---|---|
| Deliveries a week | 1 | 7 |
| Sacks in the bakehouse after a delivery | 175 | 25 |
| Price per sack | $20.00 | $20.40 |
| Value of flour after a delivery | 175 × $20.00 = $3,500 | 25 × $20.40 = $510 |
| Space it takes | A wall beside the mixers | A few sacks |
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Marco likes the offer. He has been looking for somewhere to put the second deck oven the bakery plans to buy for $45,000, and the wall of flour is standing in the obvious place.
Space freed
- The wall of 175 sacks shrinks to 25
- The floor beside the mixers is clear
- Room for the second deck oven without moving premises
Less waste
- Flour is used within a day of arriving
- Fewer sacks torn, damp or spoilt while they wait
- Less stock to count, move and insure
Less cash in stock
- Flour on the floor after a delivery falls from $3,500 to $510
- Money is spent on flour only as it is used
- That money can go on wages, repairs or the new oven
Check who pays, and when: At most businesses the biggest gain from JIT is cash: less money waits on the shelves as stock.
At Mill Lane that gain is small. Valley Grain gives 30 days' credit, so a week's flour is used long before the bakery pays for it. Read the case before you claim a cash gain.
What JIT needs before it can work
Reliable suppliers
With one night's flour in the bakehouse, every delivery must arrive on time and in good condition. There is nothing to fall back on.
Frequent, small deliveries
Valley Grain must be willing and able to send a lorry every afternoon, not once a week.
Quick, accurate ordering
The shops' figures at eight each evening let Priti order and bake the right amount. Guesses do not work when there is no spare stock.
Fairly steady demand
JIT copes with an ordinary week. A sudden rush of orders finds no spare stock to meet it.
Right first time
A spoilt batch cannot be remade from spare flour, so quality has to be built in from the start.
What JIT costs: Every sack now costs 40 cents more: 175 sacks a week × $0.40 = $70 a week, about $3,640 a year. Small orders lose the discount that comes with buying in bulk (purchasing economies of scale).
And the bakery now depends on one lorry a day. If it is late, there is no bread.
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Priti remembers February: Priti is not convinced. Last February, snow closed the road from Valley Grain's mill for two days.
With a week of flour by the mixers, Mill Lane baked through it and no customer noticed. With one night's flour, the three shops would have had no bread for two days.
Holding extra stock in case something goes wrong is just-in-case (JIC). The extra is a safety stock (buffer stock): enough to keep producing if a delivery is late, or to meet a sudden rise in orders.
The weekly wall of flour works like that. Most of it is there for the ordinary week, but it also carries the bakery through a closed road.
| Two nights with no flour | What it costs |
|---|---|
| Loaves the shops cannot sell | 2 × 1,200 = 2,400 |
| Sales lost at $3 a loaf | 2,400 × $3 = $7,200 |
| Customers who try another bakery | Some may not come back |
Supply that can fail
- The road from the mill can close in snow
- A supplier far away, or the only supplier, can let the whole bakery down
Demand that can jump
- Station Road opens in September 2026, with no sales figures yet
- A festival or a heatwave changes sales without warning
Deliveries that take weeks
- The printed cracker packets come from a printer abroad
- Each order takes six weeks, so they cannot arrive just in time
The price of feeling safe: Safety stock costs money. It ties up cash, takes space, has to be stored and insured, and some of it spoils or goes out of date before it is used.
It also hides problems. A lorry that is often late never gets fixed if nobody runs short, which is exactly the waste lean production sets out to find.
So JIC is not simply the old-fashioned opposite of JIT. It is insurance: the business pays to hold stock so that it does not run out.
Few businesses choose one system for everything. They ask the same questions about each thing they hold, and the answers can differ from item to item.
| Question to ask | Points to JIT | Points to JIC |
|---|---|---|
| How long does it keep? | It spoils in days | It keeps for months |
| How reliable is the supplier? | Close by and never late | Far away, or the road can close |
| How steady is demand? | Steady, orders known in advance | It jumps without warning |
| How long does a delivery take? | A day | Weeks |
| What does running out cost? | Little: customers can wait | Lost sales and lost customers |
| Is there a bulk discount? | Small or none | Large |
| Are space and cash short? | Yes | No |
Lena and Marco decide: Flour: daily deliveries (JIT), plus a safety stock of two nights' flour, 50 sacks, for a closed road. Cracker packets: JIC, because each order takes six weeks. Bread: just-in-time, as always.
One bakery, three answers.
| Flour after a delivery | Sacks | Value |
|---|---|---|
| Weekly delivery (now) | 175 | $3,500 |
| JIT alone | 25 | $510 |
| JIT plus two nights' safety stock | 75 | 75 × $20.40 = $1,530 |
The middle way keeps most of what JIT offers: 100 fewer sacks by the mixers, enough room for the second oven. The safety stock ties up about $1,020 of flour. Two nights without bread would lose $7,200 of sales.
It still costs about $3,640 a year in lost discount, and it still depends on Valley Grain. Once the Station Road shop has a few months of sales figures, the safety stock can be looked at again.
A judgement is often a mix: JIT where supply is reliable and stock spoils, costs a lot or takes space.
JIC where a delivery can fail or takes weeks, or where running out costs more than holding stock.
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How this comes up: JIT comes with a case. Explain one disadvantage for a named business of using JIT, for two marks. Explain one advantage and one disadvantage of JIT for that business, for four.
In longer questions a plan to move from JIC to JIT sits in a case with figures, often beside other changes, and you weigh it up for ten marks: both sides, the figures, and a judgement.
The four-mark pattern
- Name the advantage. JIT frees space, cuts waste and spoilage, or leaves less cash tied up in stock.
- Show it in the case. At Mill Lane, 175 sacks by the mixers become 25, leaving room for the second deck oven.
- Name the disadvantage. The business depends on its suppliers, loses bulk discounts, or cannot meet a sudden rise in orders.
- Show it in the case. Snow closed the road from Valley Grain's mill for two days last February; with one night's flour, the shops would have had no bread.
The trap: describing JIT instead of explaining it: 'With JIT the bakery holds little stock' says what JIT is. It is not yet an advantage. The advantage is what that does: the floor by the mixers is free for a second oven.
And read the case before you claim a cash gain: a business on 30 days' credit has not paid for this week's stock yet.
Explain one advantage and one disadvantage for Lena's Bakery Ltd of using just-in-time (JIT) for its flour.
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