Zhou Bicycle Company Zhou Bicycle Company (ZBC), located in Seattle, is a whole- sale distributor of bicycles and bicycle parts. Formed in 1981 by University of Washington Professor Yong-Pin Zhou, the firm's primary retail outlets are located within a 400-mile radius of the distribution center. These retail outlets receive the order The company distributes a wide variety of bicycles. The most popular model, and the major source of revenue to the company, is the Air Wing. ZBC receives all the models from a single manufacturer in China, and shipment takes as long as 4 weeks from the time an order is placed. With the cost of com- munication, paperwork, and customs clearance included, ZBC estimates that each time an order is placed, it incurs a cost of $65. The purchase price paid by ZBC, per bicycle, is roughly 60% of the suggested retail price for all the styles available, and the inventory carrying cost is 1% per month (12% per year) of the purchase price paid by ZBC. The retail price (paid by the customers) for the AirWing is $170 per bicycle. ZBC is interested in making an inventory plan for 2016. The firm wants to maintain a 95% service level with its customers to minimize the losses on the lost orders. The data collected for the past 2 years are summarized in the following table. A forecast for Air Wing model sales in 2016 has been developed and will be used to make an inventory plan for ZBC. Demands For Airwing Model MONTH 2014 January 6 February 12 2015 7 14 not from ZBC within 2 days after notifying the distribution center, provided that the stock is available. However, if an order fulfilled by the company, no backorder is placed; the retailers arrange to get their shipment from other distributors, and ZBC loses that amount of business. FORECAST FOR 2016 8 15 MONTH March April May June July August September October November December Total 2014 24 46 75 47 30 18 13 12 22 38 343 2015 27 53 86 54 34 21 15 13 25 42 391 FORECAST FOR 2016 31 59 97 60 39 24 16 15 28 47 439 Discussion Questions 1. Develop an inventory plan to help ZBC. 2. Discuss ROPs and total costs. 3. How can you address demand that is not at the level of the planning horizon? Source: Professor Kala Chand Seal, Loyola Marymount University.
Zhou Bicycle Company Zhou Bicycle Company (ZBC), located in Seattle, is a whole- sale distributor of bicycles and bicycle parts. Formed in 1981 by University of Washington Professor Yong-Pin Zhou, the firm's primary retail outlets are located within a 400-mile radius of the distribution center. These retail outlets receive the order The company distributes a wide variety of bicycles. The most popular model, and the major source of revenue to the company, is the Air Wing. ZBC receives all the models from a single manufacturer in China, and shipment takes as long as 4 weeks from the time an order is placed. With the cost of com- munication, paperwork, and customs clearance included, ZBC estimates that each time an order is placed, it incurs a cost of $65. The purchase price paid by ZBC, per bicycle, is roughly 60% of the suggested retail price for all the styles available, and the inventory carrying cost is 1% per month (12% per year) of the purchase price paid by ZBC. The retail price (paid by the customers) for the AirWing is $170 per bicycle. ZBC is interested in making an inventory plan for 2016. The firm wants to maintain a 95% service level with its customers to minimize the losses on the lost orders. The data collected for the past 2 years are summarized in the following table. A forecast for Air Wing model sales in 2016 has been developed and will be used to make an inventory plan for ZBC. Demands For Airwing Model MONTH 2014 January 6 February 12 2015 7 14 not from ZBC within 2 days after notifying the distribution center, provided that the stock is available. However, if an order fulfilled by the company, no backorder is placed; the retailers arrange to get their shipment from other distributors, and ZBC loses that amount of business. FORECAST FOR 2016 8 15 MONTH March April May June July August September October November December Total 2014 24 46 75 47 30 18 13 12 22 38 343 2015 27 53 86 54 34 21 15 13 25 42 391 FORECAST FOR 2016 31 59 97 60 39 24 16 15 28 47 439 Discussion Questions 1. Develop an inventory plan to help ZBC. 2. Discuss ROPs and total costs. 3. How can you address demand that is not at the level of the planning horizon? Source: Professor Kala Chand Seal, Loyola Marymount University.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
Related questions
Question
Transcribed Image Text:Zhou Bicycle Company
Zhou Bicycle Company (ZBC), located in Seattle, is a whole-
sale distributor of bicycles and bicycle parts. Formed in 1981
by University of Washington Professor Yong-Pin Zhou, the
firm's primary retail outlets are located within a 400-mile radius
of the distribution center. These retail outlets receive the order
The company distributes a wide variety of bicycles. The
most popular model, and the major source of revenue to the
company, is the Air Wing. ZBC receives all the models from a
single manufacturer in China, and shipment takes as long as 4
weeks from the time an order is placed. With the cost of com-
munication, paperwork, and customs clearance included, ZBC
estimates that each time an order is placed, it incurs a cost of
$65. The purchase price paid by ZBC, per bicycle, is roughly
60% of the suggested retail price for all the styles available, and
the inventory carrying cost is 1% per month ( 12% per year) of
the purchase price paid by ZBC. The retail price (paid by the
customers) for the AirWing is $170 per bicycle.
ZBC is interested in making an inventory plan for 2016. The
firm wants to maintain a 95% service level with its customers to
minimize the losses on the lost orders. The data collected for the
past 2 years are summarized in the following table. A forecast for
Air Wing model sales in 2016 has been developed and will be used
to make an inventory plan for ZBC..
Demands For Airwing Model
MONTH
January
February
2014
67
12
2015
7
14
FORECAST FOR 2016
8
from ZBC within 2 days after notifying the distribution center,
provided that the stock is available. However, if an order is not
fulfilled by the company, no backorder is placed; the retailers.
arrange to get their shipment from other distributors, and ZBC
loses that amount of business.
15
MONTH
March
April
May
June
July
August
September
October
November
December
Total
2014
24
46
75
47
30
18
13
12
22
38
343
2015
27
53
86
54
34
21
15
13
25
42
391
FORECAST FOR 2016
31
59
97
60
39
24
16
15
28
Discussion Questions
1. Develop an inventory plan to help ZBC.
2. Discuss ROPs and total costs.
47
439
3. How can you address demand that is not at the level of the
planning horizon?
Source: Professor Kala Chand Seal, Loyola Marymount University.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.