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?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Management Accounting In A Dynamic Environment

ISBN: 9780415839020

1st Edition

Authors: Cheryl S McWatters, Jerold L Zimmerman

Question Posted: