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A company has 9 weeks of work in process (WIP) inventory and an annual cost of goods sold (CGS) of $18,000,000. There are 50 working weeks per year.
a) What is the dollar value of WIP?
b) The company wants to reduce its WIP levels from 9 weeks to 5. Assuming that the company is successful in its efforts, what will be the financial impact to the business if the holding cost of WIP is 20%?
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