Question

Prince​ electronics, a manufacturer of consumer electronic​ goods, has five distribution centers in different regions of the country. for one of its​ products, a highspeed modem priced at ​$360 per​ unit, the average weekly demand at each distribution center is 70 units. average shipment size to each distribution center is 450 ​units, and average lead time for delivery is 3 weeks. each distribution center carries 3 ​weeks' supply as safety stock but holds no anticipation inventory.
a. on​ average, how many dollars of pipeline inventory will be in transit to each distribution​ center? ​$ nothing. ​(enter your response as an​ integer.)

Answer 1

Answer:

$378,000

Explanation:

average weekly demand 70 per distribution center

average shipment size to each distribution center is 450

average lead time 3 weeks

each distribution center has a 3 week safety stock

pipeline inventory: average lead time x average demand per distribution center x average price of each modem x number of distribution centers = 3 weeks x 70 units x $360 x 5 = $378,000

pipeline inventory in transit = $378,000

The pipeline inventory represents the minimum average that the company needs to have to at least meet the weekly demand for its product.