Answer (B) is correct . A JIT system is intended to minimize inventory. Thus, if inventory carrying costs are decreasing, a JIT system becomes more cost effective. Moreover, purchases are more frequent in a JIT system. Accordingly, a decreasing cost per purchase order is conducive to switching to a JIT system.
Answer (A) is incorrect because Switching to a JIT system should be considered when carrying costs increase and ordering costs decrease.
Answer (C) is incorrect because Switching to a JIT system should be considered when carrying costs increase and ordering costs decrease.
Answer (D) is incorrect because Switching to a JIT system should be considered when carrying costs increase and ordering costs decrease.
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