Pegasus motors corp has its engine assembly plant in, Ask an Expert

Management Studies

Pegasus Motors Corp. has its engine assembly plant in Milwaukee and its motorcycle assembly plant in Pittsburgh. Engines are transported using trucks from Roadway Inc., which costs $4,000 per trip. The motorcycle plant opens 50 weeks a year and 5 days a week. Each business day the plant produces 800 motorcycles. The holding cost for each engine is $100 per year.

a. How often should Pegasus transport engines and in what quantity?

b. Supercheap Inc. offered to transport engines for Pegasus with the following pricing policy: for each trip a fixed $1,000 is charged; if the amount of engines transported is more than 2,500 then each additional engine is charged an extra $3. Will Pegasus save money by using Supercheap Inc.? If yes, how much can Pegasus save?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92524102

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