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.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 2CS

Summary Introduction

Case summary:

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Do the inherent differences between private and public sector objectives—profit versus publicgood—render private sector category management practices unsuitable for public sectorpurchasing, where open tendering is the norm?You have now undergone the Category Management classes and your superiors have requestedfor your input on how to integrate some of the learnings into the public sector policy. Discuss and elaborate what are the activities and governance you would introduce in yourrecommendations without violating the principle of transparency and accountability withinyour organisation. This is based on Singapore context. Pls provide a draft with explanation, examples and useful links for learning purposes. Citations will be good too. This is a module in SUSS called category management and supplier evaluation

provide scholarly answers for what risk was associated with the Citibank bank loosing 50 million in August 2020

Conclusion: The report recommendations and broad conclusion to the essay. TOTAL 5 100