Concept explainers
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: The ways to address demand which is not in the planning horizon.
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Chapter 12 Solutions
EP PRIN.OF OPERATIONS MGMT.-MYOMLAB
- 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…arrow_forwardDescribe what is carrying cost in inventory management?arrow_forwardDescribe the difference between a fixed-quantity and a fixed-period inventory system?arrow_forward
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
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