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?