The company kab sells the bicycle cart k-lett. The cart is manufactured in Colombia and transported from there by ship to Gothenburg (20 days) and then sent by car to the warehouse in Vsters (1 day). Total transport time is 21 days. The company orders the products every 14 days, from the order placed in Colombia to the carts being loaded on the ship, it takes 5 days. A fixed cost (regardless of order size) of SEK 2,000 is paid for the transport. According to the forecast made by the company, the expected demand per month is 167.8 carts and has a MAD value of 32.1

a) Calculate the order-up-to-level required to reach 98% service level (k = 2.06) 

b) Describe how to decide how much to order when placing an order 

c) Calculate the average amount of capital tied up in this supply chain, the value of the product is SEK 2,400 

Kab uses a forecasting system based on a constant model that is updated with exponential equalization. When following up the forecasts, kab measures the forecast error with signs, this is done as: outcome forecast. In these measurements, it has now been discovered that the forecast error as it is defined has begun to increase 

a) What does a constant model mean? 

b) What basic assumption have we made regarding future demand?

c) Why is it important to follow up on forecast errors? 

d) What could be the reason why kab sees that the forecast error is increasing?