Apple manufactures 20 laptops with four distinct components: processor, memory, hard drive and motherboard. Under the disaggregate option, Apple designs specific components for each laptop, resulting in 20x4=80 distinct components. Under the common-component option, Apple designs laptops such that two distinct processors, two distinct memory units, two distinct hard drives and two distinct motherboards can be combined to create 20 laptops. Monthly demand for each of the 20 laptops is independent and normally distributed, with a mean of 10,000 and a standard deviation of 2,000. The replenishment lead time for each component is one month. Apple is targeting a CSL of 95 percent for component inventory.
a. Evaluate the safety inventory requirements with and without the use of component commonality.
b. Calculate the percentage of safety inventory that was reduced by using component commonality.
