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311_session_16

# 311_session_16 - Demand N~(100,10^2 8 Commonality Same idea...

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1 Risk Pooling, Commonality, Late Customization BUAD311 Hiroshi Ochiumi

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2 From Statistics Course = = = = = = n i i n i i n i i n i i n X Var X Var EX X E X X X X 1 1 1 1 3 2 1 ) ( t, independen are variables random the If ,..., , , variables random any For
3 From Statistics Course Using the property, Mean=400 Variance=4*100=400 Standard deviation=2*10=20 standard deviation does not increase proportionally!!! : has then ) 10 , 100 ( are and , , , If 4 3 2 1 2 4 3 2 1 X X X X N iid X X X X + + +

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4 From Statistics Course Generally, in the case of normal distribution, : has ... then ) , ( are ..., , , , If 3 2 1 2 3 2 1 n n X X X X N iid X X X X + + + + σ μ σ μ = = n deviation standard n mean
5 Risk Pooling We apply this to warehousing/inventory location problem. It can be applied to waiting line situations as well.

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6 Two Warehouses What is the optimal target inventory level at each WH? What is the total inventory? Demand N~(100,10^2) Warehouse A Demand N~(100,10^2) Warehouse B
7 Central Warehouse What is the optimal target inventory level at CWH? Demand N~(100,10^2) Central Warehouse

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Unformatted text preview: Demand N~(100,10^2) 8 Commonality Same idea applied to production setting. 9 Two different parts What is the optimal target inventory level for each part? What is the total inventory? Saab Demand N~(100,10^2) Floor pan for Saab 9000 Alfa Romeo Demand N~(100,10^2) Floor pan for Alfa Romeo 164 10 If the two models share the identical part, What is the optimal target inventory level? Impact on R&D costs One floor pan for two models Saab Demand N~(100,10^2) Alfa Romeo Demand N~(100,10^2) 11 Late Customization Again the same idea 12 Red and Blue T-shirts Fabric Dye in blue Cut Sew Blue N~(100,10 Dye in red Cut Sew Red N~(100,10^ 13 Benetton Red and Blue T-shirts In fashion/apparel industry forecasting is always an issue. Fabric Cut Sew Dye in red Red N~(100,10^2 Blue N~(100,10^ Dye in blue...
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