Hudson Corporation, a manufacturer of brass fittings is considering implementing JIT production system. To implement JIT production, Hudson management accountant has gathered the following information:

a. The company must incur $100,000 in annual tooling costs to reduce setup times.

b. Hudson expects that JIT production will reduce its average inventory by $500,000 per year.

c. The companys required rate of return on its inventory investments is 10% per year.

d. The relevant costs of insurance, storage, materials handling, and setups will decline by $30,000 per year.

e. Hudson estimates that implementing JIT will improve quality and reduce rework on 500 units each year, resulting in savings of $50 per unit.

f. Also better quality and faster delivery will allow Hudson to charge $2 more per unit on the 20,000 units that is sells each year.

Required:

From a financial perspective, should Hudson adopt the new JIT system? Why or why not?