What is a "just-in-time" (JIT) inventory system?

A "just-in-time" (JIT) inventory system is fundamentally about synchronizing material orders with production schedules to ensure that materials are received exactly when needed in the production process. This approach minimizes the amount of inventory held on-site, reducing storage costs and waste associated with overproduction or excessive stock.

The efficiency of JIT rests on a few key principles: demand-pull production, where products are made based on actual customer demand rather than forecasts; enhancing flexibility within the supply chain to adapt to changing demands; and fostering close relationships with suppliers to ensure timely delivery of materials. This leads to lower inventory carrying costs and allows companies to respond more rapidly to market changes.

The other options describe concepts that do not align with the core principle of JIT. Keeping large stock levels on hand contradicts the essence of the JIT philosophy, which aims to reduce inventory. A system designed to reduce employee turnover relates more to human resources than inventory management. Enhancing product design is unrelated to the goals of inventory management and production scheduling. Thus, the chosen answer highlights the essential function of JIT in aligning inventory levels with actual production needs.