Harrison Industries produces 4,000 lunch boxes each day.The average number of units in work in process is 12,000,having an average cost of $60,000.The annual carrying costs related to inventory are 10%.
Consultants have determined that the work in process could be reduced by as much as a third by rearranging the factory floor.What would the throughput time be if Harrison implements the recommended changes?

Question

Harrison Industries produces 4,000 lunch boxes each day.The average number of units in work in process is 12,000,having an average cost of $60,000.The annual carrying costs related to inventory are 10%. ​
Consultants have determined that the work in process could be reduced by as much as a third by rearranging the factory floor.What would the throughput time be if Harrison implements the recommended changes?

Quizplus · Accepted Answer

The current throughput time is 3 days (12,000 units / 4,000 units per day). Reducing work in process by a third would result in 8,000 units, leading to a throughput time of 2 days (8,000 units / 4,000 units per day).

Harrison Industries Produces 4,000 Lunch Boxes Each Day