Excercise 12-7: Epson

Epson produces printers for sale in Europe in its Taiwan factory. Printers sold in different countries differ in Inputs
Weekly demand for Epson printers in Europe Mean Demand Country France 3,000 Germany 4,000 Spain 2,000 Italy 2,500 Portugal 1,000 UK 4,000 Lead time (weeks) Target cycle service level

Standard Deviation 2,000 2,200 1,400 1,600 800 2,400 8 0.95

Demand and Standard Deviation for Epson printers in Europe during Replenishment Lead Time Mean demand during lead time SD of demand during lead time Country RL = sL = France 24,000 5,657 Germany 32,000 6,223 Spain 16,000 3,960 Italy 20,000 4,525 Portugal 8,000 2,263 UK 32,000 6,788 Aggregated 132,000 12,573 Output Required Safety Inventory for Epson printers in Europe Country France Germany Spain Italy Portugal UK Total DC Savings

Safety Inventory ss 9,305 10,235 6,513 7,444 3,722 11,166 48,384 20,681 27,704

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194980549.xlsx.ms_office - VALUES

Excersise 12-7: Epson

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 manuals. Currently Epson assembles and packs printers for sale in individual countries. The distribution of weekly demand in different countries is normally distributed with mean and standard deviation as shown in Table 8.9. 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 cycle service level of 95 percent? Epson decides to build a central distribution center (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 w eeks. How much saving of safety inventory can Epson expect as a result?

Inputs Weekly demand for Epson printers in Europe Country France Germany Spain Italy Portugal UK Lead time (weeks) Target cycle service level

Mean Demand 3000 4000 2000 2500 1000 4000 2000 2200 1400 1600 800 2400 8 0.95

Standard Deviation

Demand and Standard Deviation for Epson printers in Europe during Replenishment Lead Time Country France Germany Spain Italy Portugal UK Aggregated Output Required Safety Inventory for Epson printers in Europe Country France Germany Spain Italy Portugal UK Total DC Savings Mean demand during lead time R L = =B20*$C$27 =B21*$C$27 =B22*$C$27 =B23*$C$27 =B24*$C$27 =B25*$C$27 =SUM(B33:B38) SD of demand during lead time sL = =C20*SQRT($C$27) =C21*SQRT($C$27) =C22*SQRT($C$27) =C23*SQRT($C$27) =C24*SQRT($C$27) =C25*SQRT($C$27) =SQRT(SUMSQ(C33:C38))

Safety Inventory ss =NORMSINV($C$28)*C33 =NORMSINV($C$28)*C34 =NORMSINV($C$28)*C35 =NORMSINV($C$28)*C36 =NORMSINV($C$28)*C37 =NORMSINV($C$28)*C38 =SUM(C44:C49) =NORMSINV(C28)*C39 =C50-C52

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194980549.xlsx.ms_office - FORMULAS