Consider a work center with a demand rate of 35 parts per hour and using a container that can hold 10 parts. It is estimated that the container takes 1 hour to cycle through the work cell. Assume a safety stock level of 20 percent. What is the maximum inventory level in this system?
A) 30
B) 40
C) 50
D) 60

Question

Quizplus · Accepted Answer

First, we need to calculate the production rate using the container size and the cycle time. The production rate is 10 parts/1 hour = 10 parts/hour.

To find the maximum inventory level, we need to use the formula: 
Maximum inventory level = (Production rate × Cycle time) + Safety stock level

Substituting the values, we get: 
Maximum inventory level = (35 parts/hour × 1 hour) + (0.20 × 10 parts) 
Maximum inventory level = 35 parts + 2 parts 
Maximum inventory level = 37 parts

Therefore, the maximum inventory level in this system is 50 parts (nearest multiple of 10, i.e., one container).

Consider a Work Center with a Demand Rate of 35