A car manufacturer makes 2 models (Model A and Model B). They currently have a unique brake
Question:
A car manufacturer makes 2 models (Model A and Model B). They currently have a unique brake system for each model and carry safety stock for each model's brake system. They are considering using a common brake system for both models. The plant wants to maintain a service level of 99% (see attached Standard Normal Table). Delivery lead time for the brake systems is six (6) days (regardless of whether they are unique or common). Daily demand information is:
Car Model | Mean Daily Demand | Standard Deviation of Demand |
Model A | 800 | 100 |
Model B | 1,800 | 200 |
How many fewer brake systems will need to be carried in total Safety Stock if the manufacturer switches to a common component strategy (use the same brake system for both models) from the differentiated strategy (unique brake system for each model)? Round all safety stock numbers UP to next whole number.