Use the following to answer the questions below.
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.Lead time from plant to wholesaler is 4 weeks.The wholesaler pays for the shipments when they leave the plant.
-Refer to the instruction above.What is the total of the wholesaler's current cycle plus pipeline inventories?

Question

Quizplus · Accepted Answer

The wholesaler's current cycle inventory would be the average demand per week multiplied by the lead time:
100 units/week * 4 weeks = 400 units

The pipeline inventory would be the amount in transit from the plant to the wholesaler, which is one lot of 600 units:
600 units

Adding these two together:
400 units + 600 units = 1000 units

However, the question is asking for the total of the wholesaler's current cycle plus pipeline inventories, which means we only need to consider the highest amount between the two. In this case, the pipeline inventory of 600 units is larger than the cycle inventory of 400 units.

Therefore, the answer is C) 700 units.

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