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. Suppose each truck trip costs $1000, regardless of how many engines are on a truck. The motorcycle plant assembles and sells 300 motorcycles each day of the year. Each engine costs $500 and Harley incurs a holding cost of 20% per year.
a) How many engines should Harley load on each truck?
b) Now, Harley has decided to implement JIT manufacturing at the motorcycle assembly plant. As part of this initiative, it has reduced the number of engines loaded on a truck to 100. What would the cost of the truck trip need to be (instead of $1,000) to make a load of 100 engines optimal?