. Terminator, Inc., manufactures a motorcycle part in lots of 250 units. The raw materialscost for the part is $150, and the value added in manufacturing 1 unit from its componentsis $300, for a total cost per completed unit of $450. The lead time to make the part is 3weeks, and the annual demand is 4,000 units. Assume 50 working weeks per year.a. How many units of the part are held, on average, as cycle inventory? What is itsvalue?b. How many units of the part are held, on average, as pipeline inventory? What is itsvalue?

Given that: Lot size = 250 unitsRaw material cost = 150Value added in manufacturing = 300Total cost…

Answered: Terminator, Inc., manufactures a…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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A part is produced in lots of 1,000 units. It is assembled from2 components worth $50 total. The value added in produc-tion (for labor and variable overhead) is $60 per unit, bring-ing total costs per completed unit to $110. The average leadtime for the part is 6 weeks and annual demand is 3,800 units,based on 50 business weeks per year.a. How many units of the part are held, on average, in cycleinventory? What is the dollar value of this inventory?b. How many units of the part are held, on average, in pipe-line inventory? What is the dollar value of this inventory?(Hint: Assume that the typical part in pipeline inventoryis 50 percent completed. Thus, half the labor and variableoverhead cost has been added, bringing the unit cost to$80, or $50 + $60>2).
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You have developed the following simple product structure of items needed for your gift bag for a rush party for prospective pledges in your organization. You forecast 200 attendees. Assume that there is no inventory on ha nd of any of the items. Explode the bill of material. (Subscripts indicate the number of units required.)
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UPO Manufacturing produces a range of health care appliances for hospital as well as for home use. The company has expenenced a steady demand for as products. which are highly regarded in the health care I &id. Recently the company has undertaken a review of as memory ordering procedures as pan of a larger effort to reduce costs. One of the company's products is a blood pressure testing kit. UPD manufactures all of the components for the kit in-house except for the digital display unit The display units are ordered at six-week intervals from the supplier. This ordering system began about five years ago. because the supplier insisted on it. However, that supplier was bought out by another supplier about a year ago. and the six-week ordering requirement is no longer in place. None-theless. UPO has continued to use the six- week ordering policy. According to purchasing manager Tom Chambers. "Unless some body can give me a reason for changing. I'm going to stick with what we've been…
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