Shipments of product X from a plant to a wholesaler are made in lots of 600 units. The wholesaler's average demand for product X is 150 units per week. Lead time from plant to wholesaler is 4 weeks. The wholesaler pays for the shipments when they leave the plant. What is the total of the wholesaler's cycle inventory and pipeline inventory?

The total of the wholesaler's cycle inventory and pipeline inventory is 900 units.

Explanation:

In order to calculate the total of the wholesaler's cycle inventory and pipeline inventory we would have to make the following calculations:

Cycle inventory=lot size/2 = 600 / 2

Cycle inventory = 300 units

Pipeline inventory=leadtime*average demand=4*150

Pipeline inventory=600 units.

Therefore, Total Cycle + Pipeline inventory = 300 + 600

Total Cycle + Pipeline inventory = 900 units

The total of the wholesaler's cycle inventory and pipeline inventory is 900 units.