Slumberger Manufacturing Co

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. Because of the change, inventory carrying costs are expected to change by what amount? (Round your answer to nearest dollar.)
2. If the plant layout change is made, what is the projected incremental manufacturing cost for the year (to the nearest dollar), in terms of out-of-pocket costs?
3. What is the projected net change in operating income (per year) associated with the proposed change? Include both out-of-pocket and opportunity costs in your analysis; round final answer to nearest whole number.
4. What are some plausible nonfinancial performance metrics that the company might monitor after implementing the proposed change?