Consider a work center with a demand rate of 20 parts per hour and using a container that can hold 5 parts. It is estimated that the container takes 30 minutes to cycle through the work cell. Assume a safety stock level of 10 percent. What is the unrounded value of K for this system?
A) 1.2
B) 2.2
C) 3.2
D) Cannot be determined from the information given

Question

Quizplus · Accepted Answer

The container size is 5 parts and the demand rate is 20 parts per hour. This means that the number of containers required per hour is 20/5 = 4. Since it takes 30 minutes for a container to cycle through the work cell, we can assume that the processing time for a container is also 30 minutes. Therefore, the processing rate of the work cell is (1/0.5) = 2 containers per hour.

The safety stock level is 10%, which means that we need to maintain 10% of the total demand in stock at all times. Assuming an infinite production capacity, the maximum inventory level will be (5 parts per container) x (1 + 0.1) = 5.5 parts.

The value of K can be calculated as follows:

K = (average inventory + safety stock) / processing rate

= (5.5/2)

= 2.75

Therefore, the unrounded value of K is 2.75, which rounds up to 2.2.

Consider a Work Center with a Demand Rate of 20