Response to the following problem:
Tubb Pet Supplies purchases its inventory from a variety of suppliers, some of which require a six-week lead time before delivery. To ensure that she has a sufficient supply of goods on hand, Ms. Gibson, the owner, must maintain a large supply of inventory. The cost of this inventory averages $42,000. She usually finances the purchase of inventory and pays a 9 percent annual finance charge. Ms. Gibson's accountant has suggested that she establish a relationship with a single large distributor who can satisfy all of her orders within a two-week time period. Given this quick turnaround time, she will be able to reduce her average inventory balance to $8,000. Ms. Gibson also believes that she could save $8,000 per year by reducing phone bills, insurance, and warehouse rental space costs associated with ordering and maintaining the larger level of inventory.
Required:
a. Is the new inventory system available to Ms. Gibson a pure or approximate just-in-time system?
b. Based on the information provided, how much of Ms. Gibson's inventory holding cost could be eliminated by taking the accountant's advice?