Panther Tyres Inc., produces 50,000 units each day, and the average number of units in work in process is 200,000. The average annual inventory carrying cost percentage is 25%, and the average work in process is $1,000,000. Required: 1. Determine the throughput time. 2. Compute the annual carrying costs. 3. If the same daily output can be achieved while reducing the work in process by 50%, determine the new throughput time. 4. What has happened to the velocity of production in part 3? 5. Compute the annual carrying costs for part 3.
Panther Tyres Inc., produces 50,000 units each day, and the average number of units in work in process is 200,000. The average annual inventory carrying cost percentage is 25%, and the average work in process is $1,000,000. Required: 1. Determine the throughput time. 2. Compute the annual carrying costs. 3. If the same daily output can be achieved while reducing the work in process by 50%, determine the new throughput time. 4. What has happened to the velocity of production in part 3? 5. Compute the annual carrying costs for part 3.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...
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Panther Tyres Inc., produces 50,000 units each day, and the average number of units in work in process is 200,000. The average annual inventory carrying cost percentage is 25%, and the average work in process is $1,000,000.
Required:
1. Determine the throughput time.
2. Compute the annual carrying costs.
3. If the same daily output can be achieved while reducing the work in process by 50%,
determine the new throughput time.
4. What has happened to the velocity of production in part 3?
5. Compute the annual carrying costs for part 3.
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