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# Chapter 10 Exercise 1 Harley-Davidson has its engine assembly plant in Milwaukee and its motorcycle assembly plant in Pennsylvania.

Chapter 10 Exercise 1Harley-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?D=3,000S=1,000C=500H=0.2Q* = SQRT((2DS)/(hC) = SQRT((2*3000*1000)/(0.2*500) = SQRT(6000000/100) = 244.979Chapter 10 Exercise 2As part of its initiative to implement just-in-time (JIT) manufacturing at the motorcycle assembly plant in Question 1, Harley has reduced the number of engines loaded on each truck to 100. If each truck trip still cost $1000, 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?