1) Aquaguard manufactures three models of water purifiers in three separate plants at Taiwan. These plants serve the demand in Europe. All three models sell at a unit price of $100 and the holding cost is 5% of the selling price per month. The monthly demand for these models is normally distributed with the following parameters:

Model 1: Mean 1000, SD 300

Model 2: Mean 1000, SD 300

Model 3: Mean 1000, SD 300

The demand for Model 1 and Model 2 has a correlation coefficient of -0.4, while that for Model 3 is independent of the other two models.

Consider Aquaguard's distribution in Europe. They have a central DC that caters to the European market. The lead time from Taiwan to their DC is 3 months and orders are placed every month. Determine the expected end-of-month inventory for each product when a target in-stock probability is 95%.

Aquaguard has the option of redesigning its products. It can develop a "base" product B and ship it to the DC. The base product can then be customized into any one of the Models and sold (delayed differentiation). The company chooses to redesign Models 1 and Models 2 while Model 3 remains untouched. The lead time, the in-stock target level and the ordering policies remain the same. Determine the expected end-of-period inventory for product B.

2) Aquaguard manufactures three models of water purifiers in three separate plants in Taiwan. These plants serve the demand in Europe. All three models sell at a unit price of $100, and the holding cost is 5% of the selling price per month. The monthly demand for these models is normally distributed with the following parameters:

Model 1: Mean 1200, SD 300

Model 2: Mean 1200, SD 300

Model 3: Mean 1200, SD 300

The demand for Model 1 and Model 2 has a correlation coefficient of -0.35, while that for Model 3 is independent of the other two models.

Consider Aquaguard's distribution in Europe. They have a central DC that caters to the European market. The lead time from Taiwan to their DC is 4 months and orders are placed every month. Determine the expected end-of-month inventory for each product when a target in-stock probability is 98%.