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27 May, 23:36

Shipments of product X from a plant to a wholesaler are made in lots of 600 units. The wholesaler's average demand for product X is 150 units per week. Lead time from plant to wholesaler is 4 weeks. The wholesaler pays for the shipments when they leave the plant. What is the total of the wholesaler's cycle inventory and pipeline inventory?

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  1. 28 May, 02:08
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    The total of the wholesaler's cycle inventory and pipeline inventory is 900 units.

    Explanation:

    In order to calculate the total of the wholesaler's cycle inventory and pipeline inventory we would have to make the following calculations:

    Cycle inventory=lot size/2 = 600 / 2

    Cycle inventory = 300 units

    Pipeline inventory=leadtime*average demand=4*150

    Pipeline inventory=600 units.

    Therefore, Total Cycle + Pipeline inventory = 300 + 600

    Total Cycle + Pipeline inventory = 900 units

    The total of the wholesaler's cycle inventory and pipeline inventory is 900 units.
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