Skeeter Company produces 100,00 . insect repellent devices each day, and the average number of units in work in process is 150,000 . with an average value of $300,000 . The average annual carrying cost percentage is 30%
a. Determine the throughput time.
b. Compute the annual carrying cost.
c. If the same daily output can be achieved while reducing the work in process by 40%, determine the new throughput time.
d. Compute the annual carrying cost given the information in requirement c.
a. 150,00 . / 100,00 . = 1.5 days
b. $300,00 . x 30% = $90,000
c. 150,00 . x 40% = 60,00 . unit reduction
(150,00 . - 60,000 . / 100,00 . = .9 days
d. 30% carrying cost x ((1-.4) x $90,000 . = $16,200
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