- Please Answer All Questions With Diagrams Tables Calculations And References In Detail Thank You 1 (369.88 KiB) Viewed 102 times
calculations, and references in detail.
Thank you.
Cycling+ located in Melbourne, is a whole sale distributor of bicycles and bicycle parts. Formed in 1984 by Alex Lee, the firm's primary retail outlets are located within a 400KM radius of the distribution centre. These retail outlets receive the order from Cycling+ within 2 days after notifying the distribution centre, 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 Cycling+ loses that amount of business. The company distributes a wide variety of bicycles. The most popular model, and the major source of revenue to the company, is the Arora. Cycling+ 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 communication, paperwork, and customs clearance included; Cycling+ estimates that each time an order is placed, it incurs a cost of $65. The purchase price paid by Cycling+ 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 Cycling+. The retail price (paid by the customers) for the Aurora is $170 per bicycle. Cycling+ is interested in making an inventory plan for 2022. 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 Aurora model sales in 2022 has been developed and will be used to make an inventory plan for Cycling+. Month 2020 2021 Forecast for 2022 January 6 7 8 February 12 14 15 March 24 27 31 April 46 53 59 May 75 86 97 June 47 54 60 July 30 34 39 August 18 21 24 September 13 15 16 October 12 13 15 November 22 25 28 December 38 42 47 Total 343 391 439 I. Develop an inventory plan to help Cycling+. (3 marks) II. Discuss ROPs and total costs. (3 marks) III. How can you address demand that is not level throughout the planning horizon? (3 marks)