Matsui Industries produces 5,000 units each day, and the average number of units in work in process is 25,000.
1. Determine the throughput time.
2. If the same daily output can be achieved while reducing the work in process by 50%, determine the new throughput time.
3. Assuming the above doubling of the velocity of production, an average annual carry cost of 15%, and an average work in process inventory of $500,000, determine
(a) The current annual carrying cost
(b) The projected new annual carrying cost.