Inventory plan for Zhou Bicycle Company. The forecasted demand is summarized in the following table.

Jan 8 July 39

Feb 15 Aug 24

Mar 31 Sept 16

April 59 Oct 15

May 97 Nov 28

June 60 Dec 47

Total 439

Average demand per month = 439/12 = 36.58 bicycles. The standard deviation of the monthly demand = 25.67 bicycles. The inventory plan is based on the following costs and values.

Order cost = $65/order

Cost per bicycle = $102.00

Holding cost = ($102.00) x (1%) x 12 per year per bicycle

= $12.24 per year per bicycle

Service level =95%, with corresponding Z value of 1.645

Lead time = 1 month (4 weeks)

Total demand/year = 439 units of bicycles

Use the simple EOQ model with reorder point and safety stock. It ignores the seasonal nature of the demand. The fluctuation in demand is dealt with by the safety stock based on the variation of demand over the planning horizon. Find out inventory behavior of the company.