- 1. Harley Davidson has its engine assembly plant in Milwauke and its motorcycle assembly plant in Pennysylvania. Engines are transported between the two plants using trucks, with each trip costing $1000. The motorcycle plant assembles and sells 300 motorcycles each day. Each engine costs $500; 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?
- 2. As part of its initative 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 $1000, how does this decision affect 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?
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