RevGilla manufactures a motorcycle part in lots of 155 units. The raw materials cost for the part is $150, and the value added in manufacturing 1 unit from its components is $300, for a total cost per completed unit of $450. The lead time to make the part is 3 weeks, and the annual demand is 4,200 units. Assume 50 working weeks per year. How many units of the part are held, on average, as cycle inventory? (enter response rounded to whole number).

Question

Business

Miranda Miller

25 November, 16:49

RevGilla manufactures a motorcycle part in lots of 155 units. The raw materials cost for the part is $150, and the value added in manufacturing 1 unit from its components is $300, for a total cost per completed unit of $450. The lead time to make the part is 3 weeks, and the annual demand is 4,200 units. Assume 50 working weeks per year. How many units of the part are held, on average, as cycle inventory? (enter response rounded to whole number).

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Answers (1)

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Willie Casey · Answer 1

77.5 units

Explanation:

Given that,

Lot size = 155 units

Raw material cost = $150

value added in manufacturing per unit = $300

Total cost per unit = $450

Lead time = 30 weeks

Annual demand = 4,200 units

Average cycle inventory = Lot size : 2

= 155 : 2

= 77.5 units

Value = Average cycle inventory * cost per unit

= 77.5 * $450

= $34,875