Consider a work center with a demand rate of 50 parts per hour and using a container that can hold 12 parts. It is estimated that the container takes 1 hour to cycle through the work cell. Assume a safety stock level of 10 percent. What is the maximum inventory level for this system?
A) 20
B) 40
C) 60
D) Cannot be determined from the information given

Question

Quizplus · Accepted Answer

To calculate the maximum inventory level, we first need to calculate the container size including safety stock. 
Container size with safety stock = container size x (1 + safety stock percentage) 
= 12 x (1 + 0.1) 
= 13.2 
Next, we need to calculate the number of containers in the system: 
Number of containers in the system = (demand rate x container cycle time) ÷ container size with safety stock 
= (50 x 1) ÷ 13.2 
= 3.79, which we'll round up to 4 
Finally, we calculate the maximum inventory level: 
Maximum inventory level = container size with safety stock x (number of containers in the system - 1) 
= 13.2 x (4 - 1) 
= 39.6, which we'll round up to 40. 
Therefore, the maximum inventory level for this system is 40.

Consider a Work Center with a Demand Rate of 50