5. It is clear that the company has set the safety stock (planning for extra material “just in case” something goes wrong) level for components at zero in order to minimize their inventory during the slow season. Discuss this policy, pointing out the pros and cons of such a policy. Develop what you might suggest as a policy for safety stock given the information available in the case.

CompanyBenzie Products Company produces several lines of products, but one (they call it “product X”) uses unique parts to produce it and the demand is very seasonal. There are some possible variations in the design, so the company tends to use available-to-promise (ATP) logic to master schedule the product. Since the components to produce it are quite expensive, the company tries very hard to minimize any inventory of the product or its components during the seasons with very low sales. Product X is just now entering the low season, and the following chart represents the forecast data and actual customer orders for the next ten weeks:Week12345678910Forecast2520161615151311109Customer Orders272116131197432Master Production Schedule505050