Modeling just-in-time purchasing in the ready mixed concrete industry

The currently available economic order quantity–just-in-time (EOQ–JIT) cost indifference point models suggest that the JIT purchasing approach is always preferred to the EOQ approach when the JIT purchasing approach can capitalize on physical plant space reduction. It was found that these models did not empirically study the capability of an inventory facility to hold the EOQ–JIT cost indifference point’s amount of inventory. In addition, some important cost components under the inventory management systems were ignored by the models, for example, the out-of-stock costs and the impact of inventory policy on product quality, production flexibility. By developing the JIT purchasing threshold value (JPTV) models, this study suggests that the advantages of JIT purchasing may have been overstated in theory. The JPTV models of this study overcome the two limitations of the existing EOQ–JIT cost indifference point models. The case studies conducted in the RMC industry in Chongqing and Singapore supported the propositions in this study.