Final answer:
The expression for the echelon stock represents the inventory level at each stage of production, including cumulatively up the supply chain. For each part, it is calculated using the installation inventory and accounting for all parts needed to produce a component or final product.
Step-by-step explanation:
The question is regarding the calculation of echelon stock levels using the installation inventory levels. In an inventory system, echelon stock represents the sum of inventory at a specific stage of production including all inventory up the supply chain. For a final product composed of two parts A, one part B, and one part C, where each part C requires one part D and two parts E, we will express the echelon stock for each item.
To find the echelon stock for part C (EC), we also include the required parts for its production (one D and two E's).
The expressions for echelon stock are:
- Echelon stock for A = Installation inventory of A (IA)
- Echelon stock for B = Installation inventory of B (IB)
- Echelon stock for C = Installation inventory of C (IC) + EC
- Echelon stock for D = Installation inventory of D (ID) + EC
- Echelon stock for E = Installation inventory of E (IE) + 2 * EC
Consequently, to calculate EC, you need to know the installation inventory levels of parts D and E, which are part of the echelon stock for C.