You are in charge of designing a supply chain for furniture manufacturer, Livingston. One of your products is a study desk. The study desk comes in two colors black and cherry. Weekly demand for each desk type is normally distributed with mean 100 and standard deviation of 65 (demands for the two colors are independent). The lead time from the assembly plant to the retail store is three weeks and the retail store place order such that the retail store holds a maximum of 5 weeks of supply.

a) Based on (MIN, MAX) policy, determine the min and max levels given that a 99% CSL is targeted. What is Livingston's average on hand inventory of each of the two colors of the study desk? You notice that only top part of the desk is black or cherry; the remainder (base) is made of the standard gray metal. Hence you suggest that the retail store stock black and cherry tops separately from gray bases and assemble them when demand occurs. The replenishment lead time for components is still three weeks, desks are assembled to order at the retail store. For the components, the retail store follows the same replenishment policy found in a)

b) What is the expected on hand inventory of black tops under these conditions ?

c) What is the change in the average on hand inventory level of gray bases at the retail store with the new in-store assembly scheme relative to the original system in which desks are delivered fully assembled?