# Mattel Inc. is to manufacture 9 versions of Barbie with 2 distinct components: a

Question: Mattel Inc. is to manufacture 9 versions of Barbie with 2 distinct components: a head and a body. They are thinking of using a disaggregate option for production of Barbies, where they design specific components for each Barbie, resulting in 2 X 9 = 18 distinct components. Alternatively, using a common-component option, Mattel designs Barbies such thatMattel Inc. is to manufacture 9 versions of Barbie with 2 distinct components: a head and a body. They are thinking of using a disaggregate option for production of Barbies, where they design specific components for each Barbie, resulting in 2 X 9 = 18 distinct components. Alternatively, using a common-component option, Mattel designs Barbies such that three distinct bodies and three distinct heads can be combined to create 9 different versions of Barbie. Each component is thus used in three versions of Barbie. Monthly demand for each of the 9 versions of Barbie is independent and normally distributed with a mean of 200 and a standard deviation of 100. The replenishment lead time for each component is 10 months. Mattel is targeting a CSL of 85 percent for component inventory.

Determine the total number of safety stock component inventory required assuming they use component commonality.
How much safety stock would be saved by Mattel if they use component commonality compared to the disaggregated option?
What are the benefits of not using component commonality in this case?
a. Formula for safety stock = Z value of service level x standard deviation of monthly demand x square root ( Lead time ) Z value of service level of 85 percent = NORMSINV ( 0.85 ) = 1.0364 Therefore , safety stock = 1.0364 x 100 x square root ( 10)…View the full answer