A company supplies a customer product for which daily demand, expressed in truck loads, is normally distributed with a mean of 10 and a standard deviation of 2. Production capacity is 14 truck loads per day. Delivery time is equally distributed between one day and two days that is it takes either one or two days for the truck to travel to the customer, deliver the load, and return to the company site.
There is one truck load of raw material per truck load of final product. Raw material is obtained from a supplier. Travel time from the company site for each truck is as follows: one day to the supplier, one day (80%) or two days (20%) at the supplier, and one day to return to the company site.
The same truck fleet is used for both product delivery and raw material acquisition.
Determine the size of the truck fleet. In addition, determine the target inventory level for raw material and the inventory target level for the consumer product needed for a 95% service level for delivery to customers.
Generate a trace of the dynamics of each the two inventories that shows the following information by day.
· Simulated day
· Inventory level at start of day
· Inventory consumed during the day
· Inventory added during the day
· Inventory level at the end of the day
The time period of interest is one year (365 days).
Case Problem Issues
1. Compare this problem to the case problem in chapter 14.
2. How could a lower bound on the truck fleet size be computed?