1. Inventory Management Fostering Bicycle Company (FBC), located in Semarang, is a wholesale distributor of bicycles and bicycle parts. Formed in 1981 to grab the growth of bicycle business in Indonesia. The firm's primary retail outlets are located within a 400km radius of the distribution center. These retail outlets receive the order from FBC within 2 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 FBC loses that amount of business. The company distributes a wide variety of bicycles. The most popular model, and the major source of revenue to the company, is the AirWing. FBC receives all the models from a single manufacturer in China, and shipment takes as long as 4 weeks from the time an order is Apple's recent financial performance has been strong, its products are popular and dominate their market segment and it has a well-run supply chain, globally. Its line of iPhones and iPads are selling well, and it has a significant cash cushion. On the downside, Apple's iPhone launches seem to generate steep increase in sales, but then sales growth decline until the next model is ready (see Figure 1). The pattern may suggest that the smartphone market is maturing, and sales growth may be starting to decline. 60.000 50.000 40.000 Sales (MMs) iPhone4S 30.000 iPhone4 20.000 iPhone3G IPhonet 10.000 0.000 iPhone5S, 5C 12345678 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Figure 1. The Sales of iPhone 2007Q3 - 2014Q1 The Table 2 below shows the comparisons of the key metrics of Samsung, Blackberry, and Nokia, and Apple on their global supply chain. Table 2. Comparisons of several key metrics of supply chain Metrics Formula Samsung Blackberry Nokia Apple Inventory Turns COGS/Inventory 7.2 28.1 9.2 60.4 Days of Inventory (DOI) (Inv/COGS) x 365 50.7 13.0 39.9 6.0 Days of Receivables (DOR) (AR/sales) x 365 39.9 52.1 83.3 28.0 Days of Payable (DOP) ((AP/COGS) x 365 77 ROA Net income/Asset 14.2% -77.8% -2.9% 17.9% ROA, exc cash and cash equivalent 19.9% -116.9% -3.4% 61.5% ROE Net income/Equity 20.3% -162% -11.1% 30% Cash to cash Conversion DOI + DOR - DOP -43 Based on the Figure 1 above, do you support iPhone pre-order initiative as they currently do on their new product launching. If you were Apple director of supply chain, what are challenges you may have and how you overcome each of those challenges (b) From Table 1, Briefly explain the metrics of Inventory turns, DOI, DOR, and DOP placed. With the cost of communication, paperwork, and customs clearance included, ZBC estimates that each time an order is placed, it incurs a cost of Rp. 650,000. The purchase price paid by FBC, 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 FBC. The retail price (paid by the customers) for the AirWing is Rp. 1.7 million per bicycle. FBC is interested in making an inventory plan for 2023. The firm wants to maintain a 95% service level with its customers to minimize the losses on the lost orders. The data collected for the past 2 years are summarized in the following table. A forecast for Airwing model sales in 2023 has been developed and will be used to make an inventory plan for ZBC as shown in Tabel 1. Tabel 1. Demands for Airwing Model MONTH 2021 2022 FORECAST FOR 2023 January 6 7 8 February 12 14 15 March 24 27 31 April 46 53 59 May 75 86 97 June 47 54 60 July 30 34 39 August 18 21 24 September 13 15 16 October 12 13 15 November 22 25 28 December 38 42 47 Total 343 391 439 (a) Develop an inventory plan to help FBC. (b) Discuss ROPs and total costs. (c) How can you address demand that is not at the level of the planning horizon?