Heavey Compressors uses a lean production assembly line to make its compressors. In one assembly area, the demand is 100 parts per eight-hour day. It uses a container that holds eight parts. It typically takes about six hours to round-trip a container from one work center to the next and back again. Heavey also desires to hold 15 percent safety stock of this part in the system.

a. How many containers should Heavey Compressors be using?
b. Calculate the maximum system inventory for this part.
c. If the safety stock percentage is reduced to zero, how would this impact the number of containers, all else being equal?

Heavey Compressors should be using 13 containers for the assembly area. The maximum system inventory for this part is 104 parts. If the safety stock percentage is reduced to zero, the number of containers required would remain the same.

a. To determine the number of containers needed, we first need to calculate the production time required for the demand. In an eight-hour day, with a demand of 100 parts, each container holding eight parts, the total number of containers needed can be calculated as follows:

Number of containers = (Demand / Parts per container) + Safety stock

= (100 / 8) + (0.15 * 100 / 8)

= 12.5 + 1.875

≈ 13

Therefore, Heavey Compressors should be using 13 containers in the assembly area.

b. The maximum system inventory can be calculated by multiplying the number of containers by the parts per container:

Maximum system inventory = Number of containers * Parts per container

= 13 * 8

= 104 parts

Hence, the maximum system inventory for this part is 104 parts.

c. If the safety stock percentage is reduced to zero, the number of containers required would remain the same. The safety stock percentage affects the additional inventory needed to account for uncertainty in demand or supply. However, in this case, the number of containers is determined solely based on the demand and production time. Since the safety stock percentage does not impact the production time or the container capacity, reducing it to zero would not change the number of containers required.

In conclusion, Heavey Compressors should use 13 containers in the assembly area to meet the demand of 100 parts per eight-hour day. The maximum system inventory for this part is 104 parts. If the safety stock percentage is reduced to zero, the number of containers required would remain the same.

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