Company ZBC is a wholesale distributor of bicycles and bicycle parts situated at City S. The retail outlets of the company are within a 400-mile radius to the distribution centers. The distribution center passes an 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 a wide range of bicycles and the air wing is the popular brand which is the major source of revenue. The company receives all of its orders from a single manufacturer and shipment takes 4 weeks from the time of order. Company ZBC estimates the cost for ordering is $65. The purchase price is 60% of the retail price and the carrying cost is 1% per month of the purchase price. The retail price of the air wing is $170. The company wants to maintain a 95% service level to minimize the loss. To discuss: Reorder point (ROP) and total cost.

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Chapter 12, Problem 2CS

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Company ZBC is a wholesale distributor of bicycles and bicycle parts situated at City S. The retail outlets of the company are within a 400-mile radius to the distribution centers. The distribution center passes an 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 a wide range of bicycles and the air wing is the popular brand which is the major source of revenue.

The company receives all of its orders from a single manufacturer and shipment takes 4 weeks from the time of order. Company ZBC estimates the cost for ordering is $65. The purchase price is 60% of the retail price and the carrying cost is 1% per month of the purchase price. The retail price of the air wing is $170. The company wants to maintain a 95% service level to minimize the loss.

To discuss: Reorder point (ROP) and total cost.

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