Case Study Assignment

Northcutt Bikes: The Forecasting Problem

Jan Northcutt, owner of Northcutt Bikes, started business in 1995. She noticed the quality of

bikes she purchased for sale in her bike shop declining while the prices went up. She also found

it more difficult to obtain the features she wanted on ordered bikes without waiting for months.

Her frustration turned to a determination to build her own bikes to her particular customer

specifications.

She began by buying all the necessary parts (frames, seats, tires, etc.) and assembling them in a

rented garage using two helpers. As the word spread about her shops responsiveness to options,

delivery, and quality, however, the individual customer base grew to include other bike shops in

the area. As her business grew and demanded more of her attention, she soon found it necessary

to sell the bike shop itself and concentrate on the production of bikes from a fairly large leased

factory space.

As the business continued to grow, she backward integrated more and more processes into her

operation, so that now she purchases less than 50% of the component value of the manufactured

bikes. This not only improves her control of production quality but also helps her control the

costs of production and makes the final product more cost attractive to her customers

27 OF 27 QUESTIONS REMAINING Lego is doing period review for its newly released product, Olsney Castle. This item has a lead time of 1 week and forecasted demand of 1000 units per month. Based on below sales data, what is the average and standard deviation? (detailed steps of calculations are needed for full marks). What is the safety stock and order point for this item if management needs a 98% service level? K First Previous Next > Last >