Analysis On EMQ-JIT Cost Indifference Points

EMQ and JIT are popular approaches of managenment decisions at present. Producing method affects cost of production, which may have an impact on decisions of production, cost competitive advantage and other related advantages.The previous studies on cost of production under EMQ or JIT are mainly longitudinal. Last but not least, there are little of horizontal researchs, and the existing are almostly based on unipolar system of production.Hence, the comparative analysis of costs of JIT and EMQ is necessery, with theoretical and pratical significance.The author just analyzed the EMQ-JIT cost indifference points.Firstly, some basic theories are introduces, such as both the composition of producing cost, analyzed the model of EMQ and JIT. By analyzing and reasoning, the EMQ-JIT cost indifference points based on system of production is borned. Finally, a case study is given.By discussing the parameters, comparing this paper's EMQ-JIT cost indifference points with study of Schniederjans and Cao and analyzing the case sdudy, this paper draws a conclusion:JIT production is not always more economic than the EMQ production,even when EMQ peration is capitalize on physical plant space cost,and EMQ approach can always be preferred to the JITapproach,provided that the additional costs resulting from a certain demand.There are two implications of this study: on the one hand, it contributes to the theoretucal study of inventory cost of EMQ and JIT. On the other hand, under the premise of the optimal supply chain cost, it helps the enterpise to decide whether it should swich to the approach of JIT production if the enterpise is still adopting the EMQ approach to mamage the production, which reduces the cost and improves the efficiency of the enterprise.