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 distribution of weekly demand in different countries is normally distributed, with means and standard deviations as shown below:
Country
Demand
Mean Standard Deviation
France 3,000 2,000
Germany 4,000 2,200
Spain 2,000 1,400
Italy 2,500 1,600
Portugal 1,000 800
UK 4,000 2,400
a. 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?
b. 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 inventory can Epson expect as a result?