Please answer a) b) c) and d)

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Harley Davidson Motorcycle Company is considering purchasing
engines from a supplier in Milwaukee, Wisconsin.  Engines would be shipped from Milwaukee to
Harley’s  motorcycle assembly plant in
the state of Pennsylvania.  Engines would
be transported from Milwaukee to Pennsylvania using trucks.  Each truck trip would cost $1000, essentially
independent of the number of engines transported, as long as the load does not
exceed 2000 engines.  The motorcycle
plant assembles and sells 200 motorcycles each day (365 days per year) at a
fairly uniform rate.  Purchased engines
would cost $500 each and Harley incurs a holding cost of 20 percent per year.  Harley pays for engines at the time they are

a.)  How
many engines (EOQ) should Harley load onto each truck in order to minimize
annual truck transportation and cycle inventory holding cost? (3 points)

As an alternative, Harley is considering the implementation
of lean manufacturing in Pennsylvania. 
As part of this initiative, it is considering the financial impact of
shipping 600 engines per trip from Milwaukee (three days worth of demand). 

b). If each truck trip continues to
cost $1000, compute the annual engine transportation cost and cycle inventory
holding cost that would be incurred at Pennsylvania under lean ( 600 engines
are shipped at a time). (3 points)

c). Find the cost
of each truck trip (the value of K) in order for 600 engines per

 trip to be optimal with respect to the EOQ
model? (2 points)

d). Suppose the truck trip from
Milwaukee to Pennsylvania takes, on average, 2 days.  What is the average annual holding cost
associated with engines that are in-transit?  HINT: 
To answer this you first need to determine the average dollar value of
material that is in-transit, i.e., has been paid for, shipped, but has not yet
arrived in Pennsylvania.  (2 points)

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