Terminator, Inc, manufactures a motorcycle part in lots of 150 units. The raw ma
ID: 377615 • Letter: T
Question
Terminator, Inc, manufactures a motorcycle part in lots of 150 units. The raw materials cost for the part is $160, and the value added in manufacturing 1 unit from its components is $300, for a total cost per completed unit of $460. The lead time to make the part is 4 weeks, and the annual demand is 4,200 units. Assume 50 working weeks per year aHow many units of the part are held, on average, as cycle memory?units (Erteryour response as an integer) What is its value?s(Enter your response as an integer) b.How many units ofthe part are held, on average aspipeine memory?[-)units. (Enter your response a, an meger What is its value? (Enter yourresponse as an integer)Explanation / Answer
a. Average cycle inventiry = Q/2 = 150/2 = 75 units
Value = 75 units*$460 = $34,500
b. Pipeline inventory = dL = [(4200 units per year)/(50 weeks per year)]* lead time of 4 weeks
= 336 units
Value of pipeline inventory = 336 units*(160+(300/2)
= 336*(160+150)
= $104,160
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