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objective 20 6 1 a grouping of all the different types of equipment used to make a g 4300421

 

Objective 20.6

 

1) A grouping of all the different types of equipment used to make a given product is referred to as:

A) total quality management

B) materials requirements planning

C) manufacturing cells

D) economic order quantity

2) The time required to get equipment, tools, and materials ready to start production is referred to as:

A) setup time

B) manufacturing lead time

C) pass-through time

D) None of these answers is correct.

 

3) The time from when an order is received by manufacturing until it becomes a finished good is referred to as:

A) work-in-process time

B) manufacturing lead time

C) pass-through time

D) None of these answers is correct.

 

4) All of the following are potential financial benefits of just-in-time EXCEPT:

A) lower investments in inventories

B) lower investments in plant space for inventories

C) reducing the risk of obsolescence

D) reducing manufacturing lead time

 

5) A system that comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities is known as a(n):

A) economic order quantity (EOQ) system

B) enterprise requirements planning (ERP) system

C) just-in-time (JIT) system

D) material requirements planning (MRP) system

6) One DISADVANTAGE of an enterprise resource planning (ERP) system is:

A) the use of standard costing systems is not allowed

B) these systems are not in accordance with Generally Accepted Accounting Principles (GAAP)

C) the systems must often be customized to fit the strategic needs of the user

D) the systems increase lead times when purchasing material from a supplier

 

7) A financial benefit of a just-in-time system is that inventory carrying costs are reduced.

 

8) In a just-in-time system, suppliers are selected primarily on the basis of their ability to provide materials and products at the lowest possible price.

 

9) An Enterprise Resource Planning (ERP) System comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities.

 

10) The Jarvis Corporation produces bucket loader assemblies for the tractor industry. The product has a long term life expectancy. Jarvis has a traditional manufacturing and inventory system. Jarvis is considering the installation of a just-in-time inventory system to improve its cost structure. In doing a full study using its manufacturing engineering team as well as consulting with industry JIT experts and the main vendors and suppliers of the components Jarvis uses to manufacture the bucket loader assemblies, the following incremental cost-benefit relevant information is available for analysis:

 

The Jarvis cost of investment capital hurdle rate is 15%.

One time cost to rearrange the shop floor to create the manufacturing cell workstations is $275,000.

One time cost to retrain the existing workforce for the JIT required skills is $60,000.

Anticipated defect reduction is 40%. Currently there is a cost of quality defect assessment listed as $150,000 per year.

The setup time for each of the existing functions will be reduced by 67%. Currently the forecast for setup costs are $225,000 per year.

Jarvis will expect to save $200,000 per year in carrying costs as a result of having a lower inventory.

 

The suppliers will require a 15% premium over the current level of prices in order to position themselves to supply the material on a smaller and more frequent schedule. Currently the materials purchases are $1,500,000 per year.

 

Required:

Determine whether it is in the best interest of Jarvis Corporation to install a JIT system.

 

 

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