Writing Assignment (This is not the time for “Just in Time.”)
You are the assistant controller of Duo Therm Company and are in charge of preparing the financial statements and tax returns. One of your colleagues, the assistant controller in charge of working capital management, has just returned from a 3 day seminar on justin time (JIT) inventory. JIT reduces inventory carrying costs by having arrangements with suppliers to deliver inventory just as it is needed for production or sale. Your colleague is excited about implementing JIT, but you are concerned that not all factors are being considered. Your company has been using LIFO for about 25 years. Prepare a memo to the controller outlining why you think just in time might be a bad idea.