The Jarvis Corporation Produces Bucket Loader Assemblies for the Tractor

question 46

Essay

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.

Calculate profit sharing among LLC members based on capital contributions and default rules.

Recognize non-wrongful types of member dissociation from an LLC and the consequent liabilities.

Gain insights into the automatic dissolution scenarios of an LLC as provided by the RULLCA.

Distinguish between the responsibilities and rights of LLC members and managers, including their fiduciary obligations.

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Definitions:

Unethical Behavior

Actions or practices that violate moral or professional guidelines, often resulting in unfair or dishonest outcomes.

Unethical Conduct

Behavior that does not conform to accepted moral norms or standards, often violating ethical principles.

Company Rules

Guidelines and regulations established by a company that govern the behavior and responsibilities of its employees.

Profit Maximization

The process by which a business seeks to achieve the highest possible profit.