How many units of the part are held in pipeline inventory

Reference no: EM132466011

Assignment - Complete the following problem located in Krajewski et al. (2016).

Problem - A part is produced in lots of 1,000 units. It is assembled from 2 components worth $50 total. The value added in production (for labor and variable overhead) is $60 per unit, bringing total costs per completed unit to $110. The average lead time for the part is 6 weeks and annual demand is 3,800 units, based on 50 business weeks per year.

Part a - How many units of the part are held, on average, in cycle inventory? What is the dollar value of this inventory?

Part b - How many units of the part are held, on average, in pipeline inventory? What is the dollar value of this inventory? (Hint: Assume that the typical part in pipeline inventory is 50 percent completed. Thus, half the labor and variable overhead cost has been added, bringing the unit cost to $80 $80, or $50 + $60 / 2 $50+$60/2).

Reference no: EM132466011

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