A just-in-time inventory system, otherwise known as JIT, involves purchasing of inventories at the time these are demanded by the customers. Thus, there are no level of inventories maintained just like in merchandising companies. In effect, no inventory carrying costs are incurred by the company which decreases the total expenses, which eventually increases net income. The possibility of inventory shrinkage and inventory loss is being avoided because they are only purchasing the level of inventories equal to the demand of the customers.