Which of the following best describes the JIT inventory system?

The JIT (Just-In-Time) inventory system is best characterized by ordering materials as they are needed in the production process. This approach minimizes inventory levels, reduces holding costs, and allows businesses to operate more efficiently by ensuring that materials and products arrive just in time for use in production or sales. The primary goal of JIT is to enhance efficiency and decrease waste by eliminating unnecessary inventory, which aligns with lean manufacturing principles.

In contrast, the other choices describe practices that are contrary to the JIT methodology. Purchasing large quantities of stock to take advantage of bulk pricing involves maintaining higher inventory levels, which is not the essence of JIT. Storing excess inventory in anticipation of demand increases is a reactive approach that can lead to waste and increased carrying costs, which JIT aims to avoid. Developing long-term contracts with suppliers for regular deliveries may ensure a steady supply but does not necessarily align with the JIT philosophy of immediate need fulfillment and minimal inventory investment. Thus, the focus of JIT on efficient inventory management through timely ordering makes the second option the most accurate description.