TWIs CFO, Steven Waterhouse, is not sold on lean management. Sure, some of the operating measures have improved, but wheres the profit? Weve pulled some employees from the steering arm value stream but theyre still employed elsewhere at TWI so thats not real savings. The reduction in occupancy cost isnt real savings either, the size and cost of our building hasnt changed. According to the GAAP financial statements, the Steering Arm Value Stream operating profit has been almost $400,000 lower than in your current state in each of the last six months. It seems to me that these quality and delivery improvements are costing us a bundle. Wed be better off going back to the old ways. As the accountant dedicated to the Steering Arm Value Stream, write a memorandum in good form responding to Steve Waterhouse. Your memo should: a. Summarize what you believe are the most important changes in the future state Steering Arm Value Stream performance compared to the current state. b. Respond to Steves comments about redeployed employees and occupancy costs not representing real savings to TWI. c. In the future state configuration, does the Steering Arm value stream have the capacity to satisfy a 10% increase in demand for steering arms without adding more resources? Explain your reasoning or show your calculations. d. Explain why the performance of the TWI Steering Arm Value Stream has led to a significant reduction in operating profit as reported under GAAP. e. Estimate the level of GAAP operating profit the Steering Arm value stream will report going forward if inventory stabilizes at current levels. f. Conclude with a statement on the merits of continuing with lean operations and lean management versus reverting to conventional operations and management.