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3) SERVICE SENSITIVITY ANALYSIS: BALANCING TRADE OFFS Currently, you are purchasing product from a supplier in Youngstown, OH and shipping by the truckload to

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3) SERVICE SENSITIVITY ANALYSIS: BALANCING TRADE OFFS Currently, you are purchasing product from a supplier in Youngstown, OH and shipping by the truckload to your manufacturing facility in Billings, MT. For the transportation, you rely on two primary carriers. Carrier A 's lead time averages about 8 days with a standard deviation of 2 days. Carrier B's lead time averages 5 days with a standard deviation of 1.5 days. Based on the following demand, compare the impact on safety stock at a 97% service level between the two carriers to help make a more informed decision. Dail Demand 2500 cases 2600 cases 2850 cases 3000 cases F uen 4 14 10 2 a. What is the difference in safety stock requirements between Carrier A and Carrier B? ( I O pts) b. How much could we save on carrying cost each year with an ICC Of S15 per case? (4 pts) c. If Carrier B costs S 18,000 more per year, which carrier do you recommend contracting with for the upcoming year? Why? (2 pts)

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