A motorcycle manufacturer has its engine assembly plant in Ontario and its motorcycle assembly plant in Quebec. 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 the company incurs an annual holding cost of 20% per year.

a) How many engines should the company load onto each truck? What is the cycle inventory of engines?

b) The company has decided to reduce the number of engines loaded on each truck to 100. If each truck trip still costs $1,000, how does this decision affect annual inventory costs?

c) What should the cost of each truck be if a load of 100 engines is to be optimal?