Scenario 9.2
Shipments of Product X from a plant to a wholesaler are made in lots of 600. The wholesaler's average demand for X is 100 units per week. The lead time from the plant to the wholesaler is 4 weeks. The wholesaler pays for the shipments when they leave the plant.
-Refer to Scenario 9.2. If the plant reduces its lead time from 4 to 2 weeks and keeps its 600 unit lot size, what is the wholesaler's new total cycle plus pipeline inventories?
A) 300 units
B) 500 units
C) 700 units
D) 200 units

Question

Quizplus · Accepted Answer

With a lead time reduction to 2 weeks and a demand of 100 units per week, the pipeline inventory becomes 200 units (2 weeks * 100 units/week). The cycle inventory remains at 300 units (half of the 600 unit lot size). Therefore, the total inventory is 500 units (200 pipeline + 300 cycle).

Scenario 9.2 Shipments of Product X from a Plant to a Wholesaler