Question

Prince​ Electronics, a manufacturer of consumer electronic​ goods, has five distribution centers in different regions of the country. For one of its​ products, a highspeed modem priced at ​$330 per​ unit, the average weekly demand at each distribution center is 70 units. Average shipment size to each distribution center is 350 ​units, and average lead time for delivery is 2 weeks. Each distribution center carries 2 ​weeks' supply as safety stock but holds no anticipation inventory. a. On​ average, how many dollars of pipeline inventory will be in transit to each distribution​ center? ​$ nothing. ​(Enter your response as an​ integer.) b. How much total inventory​ (cycle, safety, and​ pipeline) does Prince hold for all five distribution​ centers? nothing units. ​(Enter your response as an​ integer.)

Answer 1

Answer:

(A) Inventory in transit: $231,000

(B) Total Inventory 2,450 units

Explanation:

(A)

pipeline inventory: 2 weeks x 70 units x 330 x 5 = 231,000

Inventory in transit: 231,000

This represent the inventory you need to have in transit at least meet the average demand in a weekly basis

(B)

Safety: 2 week x 70 units per week x 5 = 700

this is the inventory stocked in the stores for increase in demands or a delay in the supply-chain

Pipeline inventory 2 weeks x 70 x 5 = 700

cycle:  on hand inventory - safety inventory

       350 x 5 - 700 = 1050

this is the amount of units per request of materials

Total 2450