FB378 GS131 FB378 ACTUAL DEMAND WEEK ACTUAL FORECAST DEMAND FORECAST DEMAND GS131 ACTUAL 222 25 36 31 54 42 26 35 45 53 57 27 36 53 WEEK ACTUAL FORECAST DEMAND FORECAST 1 30 34 2345678 2 32 44 35 33 34 39 5 35 48 6 38 30 36 26 8 33 45 9 37 33 10 37 30 11 36 47 10 16 12 37 40 18 27 13 38 31 30 35 14 36 38 42 52 15 36 32 55 51 16 35 49 54 44 17 37 24 52 57 18 35 41 53 59 19 37 34 53 46 20 36 24 52 62 2222 21 34 52 53 51 36 41 53 23 37 30 54 46 24 36 37 53 58 848 60 Mike realized he also needed input from Ann about her perspective on the business. She indicated that she felt strongly that with better management, Northcutt Bikes should be able to use the existing warehouse for years to come, even with the anticipated growth in business. Currently, however, she views the situation as a crisis because "we're bursting at the seams with inventory. It's costing us a lot of profit, yet our service level is very poor, at less than 80%. I'd like to see us maintain a 95% or better service level without back orders, yet we need to be able to do that with a net reduction in total inventory. What do you think, Mike? Can we do better?" Questions 1. Use the available data to develop inventory policies (order quantities and reorder points) for the FB378 and GS131. Assume that the holding cost is 20% of unit price. 2. Compare the inventory costs associated with your sug- gested order quantities with those of the current order quantities. What can you conclude? 3. Do you think the lost customer sales should be included as a cost of inventory? How would such an inclusion impact the ordering policies you established in question 1?