The Western Hardware Company manufactures specialty brass door handles at its Laval plant. Western is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT?production:

Western?'s required rate of return on inventory investment is 10?% per year.

0 Estimated costs and benefits - X a. Annual additional tooling costs would be $240,000. b. Average inventory would decline by 80% from the current level of $2,015,000. c. Insurance, space, materials-handling, and setup costs, which currently total $625,000 annually, would decline by 25%. d. The emphasis on quality inherent in JIT production would reduce rework costs by 30%. Western currently incurs $380,000 in annual rework costs. e. Improved product quality under JIT production would enable Western to raise the price of its product by $16 per unit. Western sells 44,000 units each year. Print Done Required X 1. Calculate the net benefit or cost to Western if it adopts JIT production at the Laval plant. 2. What nonfinancial and qualitative factors should Western consider when making the decision to adopt JIT production? 3. Suppose Western implements JIT production at its Laval plant. Give examples of performance measures Western could use to evaluate and control JIT production. What would be the benefit of Colonial implementing an enterprise resource planning (ERP) system? Print DoneRequirement 1. Calculate the net benet or cost to Western if it adopts JIT production at the Laval plant. Fill in the table below showing the relevant costs under current production system and under the E system. (Use parentheses or a minus sign Annual Relevant Costs of Current Production System and JIT Production System for Western Hardware Company Relevant Costs under Current Production Relevant Costs under JIT Relevant items System Production System Annual tooling costs Required return on investment: Average inventory per year Insurance, space, materials handling, and setup costs Rework costs Incremental revenues from higher selling prices Total net incremental costs