CYCLOTRON BIKES, INC.*

Cyclotron Bikes, Inc. was established in 1959 by a passionate entrepreneur that wanted people to enjoy the nature as well as to stay healthy by making use of the bike. The founder of the company, Byron Funmaker, manufactured these bicycles in a small garage in rural Wisconsin. After manufacturing these bicycles, he used to haul them to a rented shop in a town close by, to sell. Gradually, the reputation of the Cyclotron Bikes rose due to the attention to quality and details Byron paid to this small scale operation. Simultaneously, there were interesting developments occurring in the U.S. to help Byron fuel his passion in manufacturing bicycles. In the 60s, the Presidents Council of Physical Fitness promoted bicycle for recreation and fitness. This gave a major fillip to bicycle industry in general, and to Cyclotron Bikes, in particular.

The hobby of bicycle riding that was dominated by male until that time got a major boost and proliferated to female riders after Audrey McElmury won the Road Cycling Championship in Brno, Czechoslovakia. This opened the door for the American women to take bicycle as a serious hobby to

Year Quarter Actual Revenue Generated (in $million)	Year Quarter Actual Revenue Generated (in $million)
2013 Q1 (Apr. -June) Q2 (July-Sept.) Q3 (Oct. -Dec.) 2014 Q4 (Jan.-March) $28.00 $34.00 $25.20 $21.60	2016 Q1 (Apr. -June) Q2 (July-Sept.) Q3 (Oct. -Dec.) 2017 Q4 (Jan.-March) $24.80 $30.40 $28.00 $24.80
2014 Q1 (Apr. -June) Q2 (July-Sept.) Q3 (Oct. -Dec.) 2015 Q4 (Jan.-March) $26.60 $35.20 $29.60 $23.2	2017 Q1 (Apr. -June) Q2 (July-Sept.) Q3 (Oct. -Dec.) 2018 Q4 (Jan.-March) $29.00 $35.00 $28.60 $22.20
2015 Q1 (Apr. -June) Q2 (July-Sept.) Q3 (Oct. -Dec.) 2016 Q4 (Jan.-March) $30.6 $31.80 $25.60 $19.00	2018 Q1 (Apr. -June) Q2 (July-Sept.) Q3 (Oct. -Dec.) 2019 Q4 (Jan.-March) $30.50 $38.00 $29.00 $24.20

stay fit and enjoy outdoors. The oil embargo of 1970s coupled with the increasing awareness of conserving environment encouraged bicycle commuting in the U.S.

While all the above interesting events were unfolding, Cyclotron Bikes, Inc. was transitioning from a job order shop to a mass production environment to cater to the demand placed on it. Byrons two children, Beth and Bart, joined the Bike Company after completing their business degrees. With them, they brought the acumen to take Cyclotron Bikes to the next level because they saw immense future in the bicycle industries worldwide.

In order to bring their ambition to fruition, they have hired a consulting company, i.e., your group, and have provided the company (you) with the data for the past 6 years, 2013-2018 (plus one quarter of 2019). As you can see from the data, the financial year of Cyclotron Bikes corresponds to April through March.

Cyclotron Bikes management has asked your group (consulting company) to provide you the following as part of the management report.

(1) Introduction: Compare similar businesses worldwide and give an outlook of the bike market and future that awaits Cyclotron. (10 points)

(2) Analysis:

(a) Based upon Cyclotrons data on page #1, compute 4, 5, 6 quarter moving averages and find which moving average will be used if Cyclotron has to forecast for Q1 (April-June) of 2019. Make sure to provide your rationale by using the forecasting error calculation such as MAD, MSE, MAPE, and Tracking Signal. (15 points)

(b) If you have the option of using only the single exponential smoothing method to project for Q1 of 2019, which value of will be appropriate based upon your calculation of MAD, MSE, MAPE? (15 points)

(c) Calculate the forecast for the next 2 years (8 consecutive quarters) using the Classical Decomposition Method. If Cyclotron is contemplating investing $10m in facility upgrades now and would like to have the Payback period of this new investment as 2 years, do you think this threshold of Payback period can be met if Cyclotron uses the revenues of last 4 quarters (or the fiscal year) as its baseline? (50 points)

(3) Recommendation:

Based upon your analysis in (2) and your study of bike market in general, provide recommendations for Cyclotron on or before April 16 in terms of the operations/manufacturing tasks the company should undertake to emerge as a market leader in the manufacturing and selling of quality bikes. (10 points)