Lady Bug Machineries uses a lean production assembly line to make its generators

Question

Lady Bug Machineries uses a lean production assembly line to make its generators. In one assembly area, the demand is 200 parts per 8-hour day. It uses a container that holds 10 parts. It typically takes about 5 hours to round-trip a container from one work center to the next and back again. They also desire to hold a 20% safety stock of this part in the system. Based on the required safety stock of zero and the number of containers computed in Question 33, calculate the maximum inventory for this part. 250 units 100 units 150 units 130 units 200 units

Explanation / Answer

Maximum inventory = Demand during lead time + Safety stock

Demand = 200 /8 = 25 parts per hour

Lead time = 5 hours

Safety stock = 20%

Demand during lead time = Demand *Lead time = 25*5 = 125

Safety stock = safety stock %*Demand rate*Lead time = 25*5*0.2= 25

Maximum inventory = 125+25 = 150

Maximum inventory = 150

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