The demand variation, 20 items. The demand variation (σd)

The demand variation

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Reference no: EM13889735

Numerical problem (JIT - Lean system)

(6 points)

A US firm procures heavy machinery from overseas. The weekly average demand of the products is

20 items. The demand variation (σd) is 2.5 items. The firm wants to maintain a 95% customer service level (z = 1.96). The firm needs to find the best suppliers from three supply companies to comply with JIT-lean perspective in order to keep inventory at the minimum.

§ Supplier A (South Asia):

Supplier A: Average lead time (LA) = 6 weeks, Lead time variation (σLA) = 3 weeks

§ Supplier B (Europe):

Supplier B: Average lead time (LB) = 4 weeks, Lead time variation (σLB) = 2 weeks

§ Supplier C (South America):

Supplier C: Average lead time (LC) = 3 weeks, Lead time variation (σLC) = 4 weeks

Reference no: EM13889735

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