Problem 1: The lead-time of an integrated services router is 4 weeks (time from customer order to shipment from CISCO). The product BOM has 100+ components. Standard cost of the BOM is $100. Below is the list of unique components with LT > 8 weeks and with only one qualified supplier. Marketing and Sales provided their best estimate of demand during the consensus forecast meeting (1000 units per quarter) but they foresee a risk of 50% upside to their numbers. This is an important product and its successful launch is very critical to regain lost market share from Huawei.

1. What will be the cost if team decides to have SI (strategic inventory) at the FG level to cover upside risk of 50% over the quarter?
2. What will be the inventory cost if team decides to have SI only for the single source components with LT > 8 weeks.
3. What will be your recommendation to the marketing/sales team in terms of placing component SI or FG SI if all components (except the above three components) have LT <= 6 weeks. And why?

Component #	Description	Component Cost	LT	Qualified Supplier
800-23475-01	Integrated Circuit	$10	16 weeks	TI
800-56891-02	Capacitor	$5	10 weeks	NWE
800-97845-01	DRAM	$20	12 weeks	Samsung