Question

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?

Answer 1

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

Step-by-step 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.