Question

Patrix Industries manufactures iPhone case covers. Joan Gallagher, the CEO, is trying to decide whether to adopt a lean thinking model. She expects that adopting lean production would save $63,000 in warehousing expenses and $39,200 in spoilage costs. Adopting lean production will require several one-time up-front expenditures: $12,750 for an employee training program, S35,000 to streamline the plant's production process, and $7,500 to identify suppliers that will guarantee zero defects and on-time delivery. Read the requirements. Requirements 1. What are the total costs of adopting lean production? 2. What are the total benefits of adopting lean production? 3. Should the company adopt lean production? Why or why not?

1.) what are the total costs of adopting lean production?

2.) What are the total benefits of adopting lean production?

3.) Should the company adopt lean production? Why or why not?

****PLEASE clearly show all work so I can understand the steps! Thanks so much!

Answer 1

1)

Calculation of Cost of Adopting Lean Production
Employee Training Program	$ 12,750.00
Streamlining Plant Production Process	$ 35,000.00
Identification of suppliers	$    7,500.00
Total Costs	$ 55,250.00

2)

Calculation of Benefits of Adopting Lean Production
Saving in Warehousing Expenses	$              63,000.00
Saving in Spoilage Cost	$              39,200.00
Total Benefits	$           102,200.00

3)Company should adopt the lean Production as benefits are more than the costs.