A company has a throughput time of 32 days. It wants to reduce this time to eight
Question:
A company has a throughput time of 32 days. It wants to reduce this time to eight days.
To do so, it will need to change its layout at a cost of $150,000. It believes that its inventory level will drop by 25 percent once these changes take effect. The capital cost of holding inventories is 10 percent per year based on the average inventory level of
$1.5 million.
Should the company adopt the new layout?
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Related Book For
Management Accounting In A Dynamic Environment
ISBN: 9780415839020
1st Edition
Authors: Cheryl S McWatters, Jerold L Zimmerman
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