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. Harley-Davidson has its engine assembly plant in Milwaukee and its motorcycle assembly plant in Pennsylvania. Engines are transported between the two plants using trucks, with each trip costing $1,000. The motorcycle plant assembles and sells 300 motorcycles each day. Each engine costs $500; Har- ley incurs a holding cost of 20 percent per year. How many engines should Harley load onto each truck? What is the cycle inventory of engines at Harley?

. Harley-Davidson has its engine assembly plant in Milwaukee and its motorcycle assembly plant in Pennsylvania. Engines are transported between the two plants using trucks, with each trip costing $1,000. The motorcycle plant assembles and sells 300 motorcycles each day. Each engine costs $500; Har- ley incurs a holding cost of 20 percent per year. How many engines should Harley load onto each truck? What is the cycle inventory of engines at Harley?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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Certainly! Here is the transcribed text that could appear on an educational website, alongside a detailed explanation. --- **Exercises** 1. **Harley-Davidson has its engine assembly plant in Milwaukee and its motorcycle assembly plant in Pennsylvania.** Engines are transported between the two plants using trucks, with each trip costing $1,000. The motorcycle plant assembles and sells 300 motorcycles each day. Each engine costs $500; Harley incurs a holding cost of 20 percent per year. - **Questions:** - How many engines should Harley load onto each truck? - What is the cycle inventory of engines at Harley? 2. **As part of its initiative to implement just-in-time (JIT) manufacturing at the motorcycle assembly plant in Exercise 1,** Harley has reduced the number of engines loaded on each truck to 100. If each truck trip still costs $1,000, - **Questions:** - How does this decision affect annual inventory costs at Harley? - What should the cost of each truck be if a load of 100 engines is to be optimal for Harley? 3. **A North Face retail store in Chicago sells 500 jackets each month.** Each jacket costs the store $100 and the company has an annual holding cost of 25 percent. The fixed cost of a replenishment order (including transportation) is $100. The store currently places a replenishment order every month for 500 jackets. - **Questions:** - What is the annual holding and ordering cost? - On average, how long does a jacket spend in inventory? - If the retail store wants to minimize ordering and holding cost, what order size do you recommend? - How much would the optimal order reduce holding and ordering cost relative to the current policy? 4. **Target purchases home goods made by a supplier in China.** Target’s stores in the United States sell 200,000 units of home goods each month. Each unit costs $10 and the company has an annual holding cost of 20 percent. Placing a replenishment order incurs clerical costs of $500/order. The shipping company charges $5,000 as a fixed cost per shipment along with a variable cost of $0.10 per unit shipped. - **Questions:** - What is the optimal order size for Target? - What is the annual holding cost of the optimal policy? - How many orders per
Transcribed Image Text:Certainly! Here is the transcribed text that could appear on an educational website, alongside a detailed explanation. --- **Exercises** 1. **Harley-Davidson has its engine assembly plant in Milwaukee and its motorcycle assembly plant in Pennsylvania.** Engines are transported between the two plants using trucks, with each trip costing $1,000. The motorcycle plant assembles and sells 300 motorcycles each day. Each engine costs $500; Harley incurs a holding cost of 20 percent per year. - **Questions:** - How many engines should Harley load onto each truck? - What is the cycle inventory of engines at Harley? 2. **As part of its initiative to implement just-in-time (JIT) manufacturing at the motorcycle assembly plant in Exercise 1,** Harley has reduced the number of engines loaded on each truck to 100. If each truck trip still costs $1,000, - **Questions:** - How does this decision affect annual inventory costs at Harley? - What should the cost of each truck be if a load of 100 engines is to be optimal for Harley? 3. **A North Face retail store in Chicago sells 500 jackets each month.** Each jacket costs the store $100 and the company has an annual holding cost of 25 percent. The fixed cost of a replenishment order (including transportation) is $100. The store currently places a replenishment order every month for 500 jackets. - **Questions:** - What is the annual holding and ordering cost? - On average, how long does a jacket spend in inventory? - If the retail store wants to minimize ordering and holding cost, what order size do you recommend? - How much would the optimal order reduce holding and ordering cost relative to the current policy? 4. **Target purchases home goods made by a supplier in China.** Target’s stores in the United States sell 200,000 units of home goods each month. Each unit costs $10 and the company has an annual holding cost of 20 percent. Placing a replenishment order incurs clerical costs of $500/order. The shipping company charges $5,000 as a fixed cost per shipment along with a variable cost of $0.10 per unit shipped. - **Questions:** - What is the optimal order size for Target? - What is the annual holding cost of the optimal policy? - How many orders per
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