Titanic Deck Chairs (TDC) produces teak deck chairs. Each chair uses one set of

Question

Titanic Deck Chairs (TDC) produces teak deck chairs. Each chair uses one set of hinges and also has a brass plate on it with TDC’s logo. All chairs use the same hinges, but the brass plate is either large or small depending on the chair model. TDC sets its reorder point for either size of brass plates to achieve the same cycle service level as that used for sets of hinges. (Both hinges and brass plates have a two-week lead time.) Which part will require more units of safety stock, hinges or large brass plates? Which part will require fewer days’ worth of safety stock, brass hinges or large brass plates? Explain our reasoning. More units of safety stock

(check one): ____ Hinges ____ Large Brass Plates? More days of safety stock (check one): ____ Hinges ____ Large Brass Plates?

Explain your answer

Explanation / Answer

As the variation of the demand is higher for brass plates considering that it varies depending on the chair model whereas hinges remain the same, the safety stock units of brass plates will be higher

SS = z*?L*? (As ? increases, Safety Stock also increases)

The part that requires fewer days worth of safety stock is Brass hinges as the Safety stock is lower compared to Brass plates.

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