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QUESTION 4 (25 MARKS) Halimi has implemented Just-In-Time (JIT) production techniques and was assured that it will improve its competitive advantage. The data regarding the
QUESTION 4 (25 MARKS) Halimi has implemented Just-In-Time (JIT) production techniques and was assured that it will improve its competitive advantage. The data regarding the recent actions were follows: Items Conventional JIT implementation Technique 68 days RM320,000 RM2,520,000 Production cycle time Inventory level Total Sales Estimated cost data, % of sales: Direct Materials Direct Labor 30 days RM80,000 RM3,400,000 30% 22% 20% 15% Variable Overhead 28% 10% Fixed Overhead 12% 5% Inventory financing cost is estimated as 15% per year. Required: a) Compute the net financial benefits (in terms of operating income) that the company realized before and after switching to JIT manufacturing. (15 marks) Discuss THREE (3) primary costs of implementing a JIT system. b) (6 marks) List FOUR (4) non-financial benefits the company might expect as a result to its move c) to JIT (4 marks)
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