Slumberger Manufacturing Co

question 137

Essay

Slumberger Manufacturing Co., Inc. is considering a change in its manufacturing layout (e.g., to a flexible manufacturing system [FMS] or cellular manufacturing), but it is unsure of the net benefits it should expect in conjunction with such a move. Company management has asked you to estimate both financial and nonfinancial effects of the proposed move. In this regard, you have collected the following information:
Required:
1. As a result of the change, inventory carrying costs are expected to change by what amount?
2. If the plant layout change is made, what is the projected amount for incremental manufacturing cost for the year, in terms of out-of-pocket costs?
3. What are the projected incremental financial results(per year) associated with this change?
4. What are some plausible nonfinancial performance metrics that the company might monitor after implementing the proposed change?

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Definitions:

Round

To adjust a number to a desired degree of precision, usually to a nearby value that is easier to work with or understand.

Markup

The sum included in the purchase price of products to account for overhead expenses and gain profit.

Inequalities

Mathematical statements that compare two expressions using inequality symbols, showing if one is less than, greater than, or not equal to the other.

Equivalent

Two expressions that have the same value or represent the same mathematical quantity.