Search for question
Question

Assume demand from one week to the next to be independent. 7. Epson produces printers for sale in Europe in its Taiwan factory. Printers sold in different countries differ in terms of the power outlet as well as the language of the manuals. Currently, Epson assembles and packs printers for sale in individual countries. The distribu- tion of weekly demand in different countries is normally distributed, with means and stan- dard deviations as shown in Table 11-6. Assume demand in different countries to be independent. Given that the lead time from the Taiwan factory is eight weeks, how much safety inventory does Epson require in Europe if it targets a CSL of 95 percent? Epson decides to build a central DC in Europe. It will ship base printers (without power supply) to the DC. When an order is received, the DC will assemble power supplies, add manuals, and ship the printers to the appropriate country. The base printers are still to be manufactured in Taiwan with a lead time of eight weeks. How much saving of safety inven- tory can Epson expect as a result? 8. Return to the Epson data in Exercise 7. Each printer costs Epson $200, and the holding cost is 25 percent. What saving in holding cost can Epson expect as a result of building the European DC? If final assembly in the European DC adds $5 to the production cost of each printer, would you recommend the move? Suppose that Epson is able to cut the production and delivery lead time from its Taiwan factory to four weeks using good information sys- tems. How much savings in holding cost can Epson expect without the European DC? How much savings in holding cost can the firm expect with the European DC?

Fig: 1