JIT production, relevant benefits, relevant costs. The Knot manufactures men's neckwea at its Spartanburg plant. The...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
JIT production, relevant benefits, relevant costs. The Knot manufactures men's neckwea at its Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooling costs $250,000 annually. b. Average inventory would decline by 80% from the current level of $1,000,000. c. Insurance, space, materials-handling, and setup costs, which currently total $400,000 annually, would decline by 20%. d. The emphasis on quality inherent in JIT production would reduce rework costs by 25%. The Knot currently incurs $160,000 in annual rework costs. e. Improved product quality under JIT production would enable The Knot to raise the price of its product by $2 per unit. The Knot sells 100,000 units each year. The Knot's required rate of return on inventory investment is 15% per year. 1. Calculate the net benefit or cost to The Knot if it adopts JIT production at the Spartanburg plant. Required 2. What nonfinancial and qualitative factors should The Knot consider when making the decision to adopt JIT production? 3. Suppose The Knot implements JIT production at its Spartanburg plant. Give examples of performance measures The Knot could use to evaluate and control JIT production. What would be the benefit of The Knot implementing an enterprise resource planning (ERP) system? JIT production, relevant benefits, relevant costs. The Knot manufactures men's neckwea at its Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. Annual additional tooling costs $250,000 annually. b. Average inventory would decline by 80% from the current level of $1,000,000. c. Insurance, space, materials-handling, and setup costs, which currently total $400,000 annually, would decline by 20%. d. The emphasis on quality inherent in JIT production would reduce rework costs by 25%. The Knot currently incurs $160,000 in annual rework costs. e. Improved product quality under JIT production would enable The Knot to raise the price of its product by $2 per unit. The Knot sells 100,000 units each year. The Knot's required rate of return on inventory investment is 15% per year. 1. Calculate the net benefit or cost to The Knot if it adopts JIT production at the Spartanburg plant. Required 2. What nonfinancial and qualitative factors should The Knot consider when making the decision to adopt JIT production? 3. Suppose The Knot implements JIT production at its Spartanburg plant. Give examples of performance measures The Knot could use to evaluate and control JIT production. What would be the benefit of The Knot implementing an enterprise resource planning (ERP) system?
Expert Answer:
Answer rating: 100% (QA)
Knot Requirement 1 Relevant Costs under Relevant Items Current J Annual tooling costs 250000 Require... View the full answer
Related Book For
Economics of Money Banking and Financial Markets
ISBN: 978-0134733821
12th edition
Authors: Frederic S. Mishkin
Posted Date:
Students also viewed these finance questions
-
which processes if any are constraints for the current level of demand GIven any constraints identified in part 1 above determine the best production and sales mix for the two types of tables
-
Raphael observes that at the current level of interest rates there is an excess supply of bonds and therefore he anticipates an increase in the price of bonds. Is Raphael correct?
-
Raphael observes that at the current level of interest rates there is an excess supply of bonds, and therefore he anticipates an increase in the price of bonds. Is Raphael correct?
-
Do you think that differences in reward practices across countries reflect differences in national cultures or other influences?
-
Yonghong opened Books Galore, Inc., for business on January 1, Year 1. The following financial items summarize the first year of operations. Use these items to prepare the Year 1 multi-step income...
-
You have accepted an appointment to audit the financial statements of Hippo Ltd for the year ended 31 December 20X1. The financial statements of the company for the year ended 31 December 20X0 were...
-
In Exercises 1518, use the given set of points to a. Compute b1. b. Compute the residual standard deviation se. c. Compute the sum of squares for x, (x x)2. d. Compute the standard error of b1, sb....
-
A laser-materials-processing apparatus encloses a sample in the form of a disk of diameter D = 25 mm and thickness w = 1 mm. The sample has a diffuse surface for which the spectral distribution of...
-
Adjust FVA at Year-End An investor purchased 50 shares of Mallard common stock at $20 per share on March 15. On December 31, the stock was quoted at $19 per share and Mallard declared and paid a...
-
Consider the snapshot of the Linear Hashing index shown in Figure 11.7. Assume that a bucket split occurs whenever an overflow page is created. In figure 11.7 1. What is the maximum number of data...
-
b) NDT technician has proposed a RT inspection for welded section of a piping system. The diameter of the pipe is Im and the thickness of the pipe material is 20mm and maximum weld part thickness is...
-
Revise these sentences to present the ideas in parallel form: a. Mr. Hill is expected to lecture three days a week, to counsel two days a week, and must write for publication in his spare time. b....
-
How is mobile technology changing the practice of business communication?
-
Your CEO has asked you to provide information on a potential new market for your companys service. What type of report would be most suitable? Why?
-
Your web design start-up has been commissioned to create a distinct profile page for a client. You have told your team to visit the profile pages of three of the clients competitors. Analyze the...
-
As a team or department leader, what steps can you take to ensure that your meetings are successful and efficient?
-
Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is...
-
Listed below are common types of current liabilities, contingencies, and commitments: a. Accounts payable b. Bank loans and commercial paper c. Notes payable d. Dividends payable e. Sales and excise...
-
Suppose that you are considering going on vacation abroad and that the euro has appreciated by 15% with respect to the U.S. dollar. Would you be more or less willing to visit Rome and Paris?
-
If the fed funds rate is at zero, the Fed can no longer implement effective accommodative policy. Is this statement true, false, or uncertain? Explain.
-
How can forward guidance as a tool of the central bank impact the policy instrument, intermediate targets, and goals?
-
A ___________ chart is a histogram that can help you identify and prioritize problem areas. A. Pareto B. control C. run D. scatter
-
What are the Seven Basic Tools of Quality? If applicable, describe how you have you used these tools in the workplace.
-
Perform the monitoring and controlling tasks for one of the case studies provided in Appendix C. If you are working on a real team project, create relevant monitoring and controlling documents, such...
Study smarter with the SolutionInn App