Problem
Zero Motorcycles has its engine assembly plant in California and its motorcycle assembly plant in South Carolina. Engines are transported between the two plants using trucks, with each trip costing $2,200. The motorcycle plant assembles and sells 250 motorcycles each day. Each engine costs $775, and Zero incurs a holding cost of 15 percent per year.
1. What is the Fixed Cost Incurred per Order (S) What is the Ordering Cost?
2. What is the Annual Holding Cost (hC)?
3. What is the Total Inventory Cost? What is the Cycle Inventory of engines at Harley?
4. What is the Average Flow Time?
5. What is the Average Flow Time resulting from the Cycle Inventory?