23 Mar Using JIT to reduce inventory holding costsNash Ma
Using JIT to reduce inventory holding costsNash Manufacturing Company obtains its raw materials from a variety of suppliers. Nash’s strategy is to obtain the best price by letting the suppliers know that it buys from the lowest bidder. Approximately four years ago, unexpected increased demand resulted in materials shortages. Nash was unable to find the materials it needed even though it was willing to pay premium prices. Because of the lack of raw materials, Nash was forced to close its manufacturing facility for two weeks. Its president vowed that her company would never again be at the mercy of its suppliers. She immediately ordered her purchasing agent to perpetually maintain a one-month supply of raw materials. Compliance with the president’s orders resulted in a raw materials inventory amounting to approximately $2,000,000. Warehouse rental and personnel costs to maintain the inventory amounted to $10,000 per month. Nash has a line of credit with a local bank that calls for a 12 percent annual rate of interest. Assume that Nash finances the raw materials inventory with the line of credit.Requireda. Based on the information provided, determine the annual holding cost of the raw materials inventory.b. Explain how a JIT system could reduce Nash’s inventory holding cost.c. Explain how most-favored customer status could enable Nash to establish a JIT inventory system without risking the raw materials shortages experienced in the past.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.