QUESTION: Develop an inventory plan to help the bicycle company.

A Bicycle Company is a wholesale distributor of bicycles and bicycle parts. The firms primary retail outlets are located within a 650-kilometer radius of the distribution center. These retail outlets receive the order from this bicycle company within two days after notifying the distribution center, 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 the bicycle company loses that amount of business. The company distributes a wide variety of bicycles. The most popular model, and the major source of revenue for the company, is the AirWing.

The bicycle company receives all the models from a single manufacturer in another country, and shipment takes as long as four weeks from the time an order is placed. With the cost of communication, paperwork, and customs clearance included, the bicycle company estimates that each time an order is placed, it incurs a cost of $65.

The purchase price paid by the bicycle company, 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 the bicycle company. The retail price (paid by the customers) for the AirWing is $170 per bicycle.

The bicycle company is interested in making an inventory plan for 2019. The firm wants to maintain a 95% service level with its customers to minimize the losses on lost orders. The data collected for the past two years are summarized in the preceding table. A forecast for AirWing model sales in 2019 has been developed and will be used to make an inventory plan for the bicycle company.

Demande for irWino Mndel