Engelhaupt Company is considering a switch to JIT. It has gathered the following data:

In addition, Engelhaupt estimates that its relationship with its customers will improve by 10 percent. Because it will use fewer suppliers, however, there is a greater risk associated with purchasing.

Required:

A. What is the total cost savings associated with switching to JIT?B. How should you determine the costs or cost savings associated with increased customer satisfaction and purchasing risk?C. Should Engelhaupt make the switch to JIT? Why?

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Increase in prevention quality costs Increase in appraisal quality costs Increase in employee training costs Increase in ordering costs Decrease in carrying costs Decrease in internal failure costs $140,000 234,000 125,600 95,740 480,000 110,800