ZBC is a wholesale distributor of bicycles and bicycle parts situated at place S. The retail outlets of the company are within 400 mile radius to the distribution centers. The distribution center passes order to its retail outlets within 2 days after the order is placed by the retail outlets provided the stocks are available. When there are no stocks, no backorder is taken and the outlets have to arrange the products from some other distributors and the company loses its order. The company distributes wide range of bicycles and air wing is the popular brand which is the major source of revenue. The company receives all of its order from single manufacturer and shipment takes 4 weeks from the time of order. ZBC estimates the cost for ordering is $65. The purchase price is 60% of the retail price and carrying cost is 1% per month of the purchase price. The retail price of airwing is $170. Month 2011 2012 Forecast for 2013 Jan 6 7 8 Feb 12 14 15 Mar 24 27 31 Apr 46 53 59 May 75 86 97 Jun 47 54 60 Jul 30 34 39 Aug 18 21 24 Sep 13 15 16 Oct 12 13 15 Nov 22 25 28 Dec 38 42 47 Total 343 391 439 The demand for the past two year is shown in the table and the company wants to make inventory plan for 2016. The company wants to maintain 95% service level to minimize the loss. To discuss: ROP and total cost.

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Chapter 12, Problem 1.2CS

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Introduction:

ZBC is a wholesale distributor of bicycles and bicycle parts situated at place S. The retail outlets of the company are within 400 mile radius to the distribution centers. The distribution center passes order to its retail outlets within 2 days after the order is placed by the retail outlets provided the stocks are available.

When there are no stocks, no backorder is taken and the outlets have to arrange the products from some other distributors and the company loses its order. The company distributes wide range of bicycles and air wing is the popular brand which is the major source of revenue.

The company receives all of its order from single manufacturer and shipment takes 4 weeks from the time of order. ZBC estimates the cost for ordering is $65. The purchase price is 60% of the retail price and carrying cost is 1% per month of the purchase price. The retail price of airwing is $170.

Month 2011 2012 Forecast for 2013
Jan 6 7 8
Feb 12 14 15
Mar 24 27 31
Apr 46 53 59
May 75 86 97
Jun 47 54 60
Jul 30 34 39
Aug 18 21 24
Sep 13 15 16
Oct 12 13 15
Nov 22 25 28
Dec 38 42 47
Total 343 391 439

The demand for the past two year is shown in the table and the company wants to make inventory plan for 2016. The company wants to maintain 95% service level to minimize the loss.

To discuss: ROP and total cost.

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