Erik Linden, President, is considering implementing some changes. He is considering investing in a $100,000 bar coding system to replace the current manual system of inventory updates. In addition, he will institute a strict damage control system with suppliers, where suppliers will be charged for damaged goods that have to be sorted and returned and for improper bar coding. He feels that this should reduce the damaged goods activities by 90% and estimates that supplier charge backs will total $10,000. Required: Prepare an analysis showing the effect on profits of such changes. What is the percentage reduction in the time spent on non-value added activities?
Linden's Supermarket Chain has just performed a value-added activity ranking in its warehouses for the activity of receiving groceries. The results of the company's analysis with value added rankings appear below:

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The Answer of Erik Linden, President, is considering implementing some changes. He is considering investing in a $100,000 bar coding system to replace the current manual system of inventory updates. In addition, he will institute a strict damage control system with suppliers, where suppliers will be charged for damaged goods that have to be sorted and returned and for improper bar coding. He feels that this should reduce the damaged goods activities by 90% and estimates that supplier charge backs will total $10,000. Required: Prepare an analysis showing the effect on profits of such changes. What is the percentage reduction in the time spent on non-value added activities?
Linden's Supermarket Chain has just performed a value-added activity ranking in its warehouses for the activity of receiving groceries. The results of the company's analysis with value added rankings appear below:

Erik Linden, President, Is Considering Implementing Some Changes