JIT purchasing and setup reduction in an integrated inventory model

The authors study the effect of JIT order quantities on the purchase of raw materials and of the investments to reduce setup time. They examine the total relevant cost for an integrated inventory model, which unifies the finished product and the raw materials used for manufacturing it. A comparison of the total costs between the present JIT model and the conventional ‘economic production quantity’ model suggests that JIT order splitting and investment in setup reduction could be cost-effective.