As part of its initiative to implement just-in-time (JIT) manufacturing at the motorcycle assembly plant in Exercise 1, Harley has reduced the number of engines loaded on each truck to 100. If each truck trip still costs $1.000, how does this decision impact annual inventory costs at Harley" What should the cost of each truck be if a load of 100 engines is to be optimal for Harley?
Harley-Davidson has its engine assembly plant in Milwaukee and its motorcycle assembly plant in Pennsylvania. Engines are transported between the two plants using trucks, with each trip costing $1.000. The motorcycle plant assembles and sells 300 motorcycles each day. Each engine costs $500, and Harley incurs a holding cost of 20 percent per year How many engines should Harley load onto each truck? What is the cycle inventory of engines at Harley?