Just a pretext, I have just started solving cases and hence my doubts may be very basic, please bear with me on this. My apologies in advance. My query is of two parts.
"On an average month, AA needs 3,600 springs. Sometimes the OEM-plant is quicker and produces up to 1,000 cars a day."
This part of the question essentially means,
- Avg usage of springs/day - 180 springs - Therefore, OEM produces 45 cars/day
- Max. usage of springs/day with the conditional "quicker" production of OEM - 4000 springs - 1000 cars
Even for case study purposes, this variation of max. quantity from avg. quantity seems extremely exaggerated (demand variations & production planning may inflict these changes but definitely not due to 'quicker' production). Can we expect such instances in interview cases as well?
Risk given in solution:
"Risks: running out of springs and not delivering them to the OEM plan. Major business threat."
Isn't it justified that we have considered max. lead time possible while calculating the safety stock and this is an inevitable threat that even a business with really good SCM infrastructure might face?
Insights much appreciated.