An electronic manufacturing plant purchases components from various suppliers. For a particular component, the plant has a choice between two suppliers. Supplier 1 has the delivery lead times with a mean of 20 days and a standard deviation of 4 days. Supplier 2 has delivery lead times with a mean of 20 days and a standard deviation of 2 days. Assume that both suppliers have normally distributed lead times.

a) Assuming that the plant purchases the component on a lot-for-lot basis and wants to be 95% certain that the component is in stock when needed by the production schedule, how many days of lead time are needed if supplier 1 is used? If supplier 2 is used?

b) How many days will a typical component purchased from supplier 1 wait in inventory before being used? From supplier 2? How might this information be used to justify using supplier 2 even if it charges a higher price?

c) Suppose that the plant purchases on a lot-for-lot basis 60 parts from different suppliers, all of which have delivery times like those of supplier 2. Assuming all components are assigned the same lead time, what lead times are required to ensure that all components are in stock when required by the schedule? How does your answer change if all suppliers have lead time like those of supplier 1?