Question: ANSWER QUESTION 5 ONLY 1. Using the following inventory data, conduct an ABC analysis of the inventory using the decision rule 80, 15, 5. Item

ANSWER QUESTION 5 ONLY

1. Using the following inventory data, conduct an ABC analysis of the inventory using the decision rule 80, 15, 5.

Item Cost Volume

Racing bike (RB) 1240 135

Tandem bike (TB) 725 120

Mountain bike (MB) 685 175

Standard bike (SB) 565 750

Child bike (CB) 125 600

2. Using the following data, conduct an XYZ analysis.

Racing bikes are mostly purchased from November to March and then sales fall off considerably April to October. The company has found that demand responds both to the season and the state of the economy in a fairly predictable manner.

The company has not been able to predict demand for tandem bikes. It seems that the purchases come in bunches but for no obvious reason.

Mountain bike demand has two peaks per year, one in early winter and one in early summer at the start of the vacation season.

Demand for standard bikes is somewhat less consistent than that for child bikes but is still fairly steady throughout the year with a slight rise before winter. Curiously, standard bike sales seem to mirror child bike sales but lag one month behind.

Child bikes are a common birthday gift for children. As a result, demand is fairly consistent throughout the year.

Bike Type	XYZ Classification

3. Using the data above, conduct an ABC-XYZ analysis for bike sales and complete the table which follows.

Item and Classification	Replenishment	Safety Stock	Inventory Control
Racing bike
Tandem bike
Mountain bike
Standard bike
Child bike

4. Calculate the economic order quantity for each of the following using the information provided above and below.

Item	Ordering Cost	Annual Holding Cost	EOQ
Racing bike	200	405
Tandem bike	150	425
Mountain bike	310	345
Standard bike	125	320
Child bike	135	270

5. Calculate the safety stock level for each type of bike using the information above and the following information.

Item	Maximum use	Mean Use	Maximum Lead Time	Mean Lead Time	Safety Stock
Racing bike	7		12	6.55
Tandem bike	3		20	8.09
Mountain bike	12		8	3.83
Standard bike	15		4	2.2
Child bike	11		4	2.2

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