A retailer that sells printers, currently sells five variants of a printer. The main component that differentiates these printers is their printer head. The retailer is evaluating whether to introduce commonality in the printer head so that the final assembly can be postponed and hence inventories are kept in component form. Currently each printer costs $500. If component commonality is introduced, the assembly cost per unit increases by $5. The assembly time is just few minutes and hence can be ignored. Weekly demand for each variant of printer is normally distributed with a mean of 1,200 and a standard deviation of 250. The retailer's target cycle service level is 96 percent. Replenishment lead time for components is 3 weeks. The retailer currently uses a continuous review policy and its annual holding cost is 20 percent. Given the savings on holding cost due to component commonality, and, the cost increase in assembly under commonality, do you recommend the retailer to use component commonality? Please show your analysis.

A retailer that sells printers, currently sells five variants of a printer. The main component that differentiates these printers is their printer head. The retailer is evaluating whether to introduce commonality in the printer head so that the final assembly can be postponed and hence inventories are kept in component form. Currently each printer costs $500. If component commonality is introduced, the assembly cost per unit increases by $5. The assembly time is just few minutes and hence can be ignored. Weekly demand for each variant of printer is normally distributed with a mean of 1,200 and a standard deviation of 250. The retailer's target cycle service level is 96 percent. Replenishment lead time for components is 3 weeks. The retailer currently uses a continuous review policy and its annual holding cost is 20 percent. Given the savings on holding cost due to component commonality, and, the cost increase in assembly under commonality, do you recommend the retailer to use component commonality? Please show your analysis.

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Description: A retailer that sells printers, currently sells five variants of a printer. The main component that differentiates these printers is theirprinter head. The retailer is evaluating whether to introduce commonality in the printer head so that the final

MATLAB: An Introduction with Applications

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Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

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Question

A retailer that sells printers, currently sells five variants of a printer. The main component that differentiates these printers is their
printer head. The retailer is evaluating whether to introduce commonality in the printer head so that the final assembly can be
postponed and hence inventories are kept in component form.
Currently each printer costs $500. If component commonality is introduced, the assembly cost per unit increases by $5 The
assembly time is just few minutes and hence can be ignored.
Weekly demand for each variant of printer is normally distributed with a mean of 1,200 and a standard deviation of 250. The
retailer's target cycle service level is 96 percent. Replenishment lead time for components is 3 weeks. The retailer currently uses a
continuous review policy and its annual holding cost is 20 percent.
Given the savings on holding cost due to component commonality, and, the cost increase in assembly under commonality, do
recommend the retailer to use component commonality? Please show your analysis.
you

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