Q2

Suppose that you are the consultant hired by a manufacturing company to design a suitable inventory management strategy for its Alloy \#1 products for determining the weekly production schedule. Alloy \#1 products are the products with the highest priority and they can be produced using either make-to-order or make-to-stock approach. The typical production process is as follows: The weekly production schedule specifies the production quantities of products and feedstocks that the company has to produce every week. After discussing with the production staff about the product hierarchy, you have compiled the following information about the products. Question 1 Recommend an appropriate inventory management strategy for the Alloy #1 products to meet a target service level of 95% with order fulfilment time (the time lapsed from receiving an order to shipping out the order) of not more than 2 weeks, and estimate the average value of safety stock held after the implementation of the strategy for the following two cases: Case 1. The weekly demand of each product is normally distributed. Case 2. The weekly demand of each product is normally distributed except that of Product 1029. Question 2 Suppose that the yield from 1mm feedstock to the 6 products follows the probability distribution below. Discuss how to design a good inventory control policy for the products made from 1mm feedstock to meet a target service level of 95% with order fulfilment time of not more than 2 weeks