Answer (D) is correct . A just-in-time (JIT) inventory management system limits the output of each manufacturing operation to the demand of the next operation. Shipment of raw materials from vendors are scheduled to arrive “just in time” to be used in the production process. Inventory storage is considered a nonvalue-adding activity, and raw materials on hand are thus kept to a minimum.
Answer (A) is incorrect because The economic order quantity (EOQ) model is an inventory management approach used to minimize the sum of ordering and carrying costs.
Answer (B) is incorrect because A materials requirements planning (MRP) system enables a company to efficiently fulfill the requirements of the master production schedule by coordinating both the manufacture of component parts for finished goods and the arrival of raw materials necessary to create the intermediate components.
Answer (C) is incorrect because First-in first-out (FIFO) is an inventory cost flow assumption that assumes that the first goods purchased are the first sold.
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