WEEK 7
Solve the following problem:
| Component # | Description | Component Cost | LT | Qualified Supplier |
| 800-23475-01 | Integrated Circuit | $10 | 16 weeks | TI |
| 800-56891-02 | Capacitor | $5 | 10 weeks | NWE |
| 800-97845-01 | DRAM | $20 | 12 weeks | Samsung |
Problem 1: The lead-time of an integrated services router is 4 weeks (time from customer order to shipment from CISCO). The product BOM has 100+ components. Standard cost of the BOM is $100. Below is the list of unique components with LT > 8 weeks and with only one qualified supplier. Marketing and Sales provided their best estimate of demand during the consensus forecast meeting (1000 units per quarter) but they foresee a risk of 50% upside to their numbers. This is an important product and its successful launch is very critical to regain lost market share from Huawei.
- What will be the cost if team decides to have SI (strategic inventory) at the FG level to cover upside risk of 50% over the quarter?
- What will be the inventory cost if team decides to have SI only for the single source components with LT > 8 weeks.
- What will be your recommendation to the marketing/sales team in terms of placing component SI or FG SI if all components (except the above three components) have LT <= 6 weeks. And why?
