Work Element Mean Observed Time (minutes) Perfomance Rating Factor ST

1 1.20 0.95

2 1.00 0.85

3 0.80 1.10

4 0.90 1.10

1. Calculate the normal time for each of the work elements.

2. Th e Arkade Company has decided to use a 15 percent allowance factor based on job time. Calculate the standard time for each work element and for the total job.

3. The Arkade Company is considering switching to a 15 percent allowance based on time worked. Calculate the new standard time for each work element and for the total job.

4. Yasuko's Art Emporium (YAE) ships art from its studio located in the Far East to its distribution center located on the West Coast of the United States. YAE can send the art either via transoceanic ship freight service (15 days transit) or by air freight (2 days transit time). YAE ships 18,000 pieces of art annually.

(a) Calculate the average annual transportation inventory when sending the art via transoceanic ship freight service.

(b) Calculate the average annual transportation inventory when sending the art via air freight.

(c) What additional information is needed to compare the two alternatives?

5. Frederick's Farm Factory (FFF) currently maintains an average inventory valued at $3,400,000. The company estimates its capital cost at 10 percent, its storage cost at 4.5 percent, and its risk cost at 6 percent.

(a) Calculate the annual holding cost rate for FFF.

(b) Calculate the total annual holding costs for FFF.

6. A technology problem has rendered some of the inventory at FFF (Problem 6) obsolete. FFF estimates that the risk cost of its inventory is now 10 percent.

(a) Calculate the new annual holding cost rate.

(b) Calculate the new total annual holding costs for FFF.