Question
A company sells ten variants of a product. To make postponement possible so the inventories can be kept in component form the company needs to
A company sells ten variants of a product. To make postponement possible so the inventories can be kept in component form the company needs to introduce commonality in the product. Currently, total cost for each device is $900. Introducing commonality will increase the cost to $990. Weekly demand for one of the ten variants (P1) is normally distributed, with a mean of 800 and a standard deviation of 210. Each of the other nine variants (P2 to P10) has a weekly demand of 25 with a standard deviation of 20. The company aims to provide a 90 percent level of service. Lead time for parts is 3 weeks. The company manages all inventories using a continuous review policy and incurs an annual holding cost of 15%.
A new analysis of historical data shows that the aggregate weekly demand (P1 to P10) is 1100. What is the average of aggregate demand over lead time?
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