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Ladstone, J. H. ed., APICS Dictionary, 15th ed. (Chicago, IL: CHAPTER 11 MANAGING INVENTORY THROUGHOUT THE SUPPLY CHAIN 363 FB378 GS131 FB378 GS131 ACTUAL DEMAND FORECAST ACTUAL DEMAND ACTUAL DEMAND 1 WEEK 25 26 27 2 ACTUAL DEMAND 31 45 FORECAST 36 35 36 FORECAST 54 53 53 42 57 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 FORECAST 30 32 35 34 35 38 36 33 37 37 36 37 38 36 36 35 37 35 37 36 34 36 37 36 34 44 33 39 48 30 26 45 33 30 47 40 31 38 32 49 24 41 34 24 52 41 30 37 Mike realized he also needed input from Ann about her perspective on the business. She indicated that she felt strongly that with better management, Northcutt Bikes should be able to use the existing warehouse for years to come, even with the anticipated growth in business. Currently, however, she views the situation as a crisis because we're bursting at the seams with inventory. It's costing us a lot of profit, yet our service level is very poor, at less than 80%. I'd like to see us maintain a 95% or better service level without back orders, yet we need to be able to do that with a net reduction in total inventory. What do you think, Mike? Can we do better? 10 18 30 42 55 16 27 35 52 51 44 57 59 46 62 51 60 46 Questions 1. Use the available data to develop inventory policies (order quantities and toorder points) for the FB378 and GS131. Assume that the holding cost is 20% of unit price. 2. Compare the inventory costs associated with your sug- gested order quantities with those of the current order quantities. What can you conclude? 3. Do you think the lost customer sales should be included as a cost of inventory? How would such an inclusion impact the ordering policies you established in question 1? 54 53 58 REFERENCES Books and Articles Lee, H. L. V. Padmanabhan, and S. Whang. "The Bullwhip Effect in Supply Chain," Sloan Management Review 38. to. 3 (Spring 1997): 70-77. Magretta, 1. "Fast, Global, and Entrepreneurial Supply Chain APICS, 2016). Coming after