First consider if there is only one policy (EOQ model) for the whole year and find optimum ordering amount and ROP. Then discuss its difficulty to use in for this product and if you assume the high season demand and low season demand seperately, how would you update your ordering policies (i.e., order quantity and order point values).

Zhou Bieycle Company (ZBC), located in Seattle, is a wholesale distributor of bicyeles and bicycle parts. Formed in 1981 , by Univensity of Washington Profeusor Yong-Pin Zhou, the firm' primary retail outlets are located within a 400 -mile tadius of the distribution center. These retail ootlets receive the onder from 7AC within 2 days after notifying the distribution center, provided that ibo stock is available. However, if an order is not fulfilled by the crmapany, be backorder is placed; the retailers amange to get their thipmeat from other distributors, and 2BCC knes that amount of business. The company distributes a wide variety of bicyeles. The most popular model, and the majos source of revenue to the company, is the AirWing. ZBC recelves all the models from a single manalacturer in China, and shipment taker as long as 4 weeks from the tine an order is placed. With the cost of commenication, puperwonk, and customs elearance included. 7BC catimates that each time an order is placed, it incurs a cost of \$6. The purchase price paid by 2ZuC. per bieycle, is roughly 60% of the suggested retail price for all the Atyles available, and the inventory carrying cose is 1% per monk (12\% per year) of the purchave price paid by ZMC. Tbe retail price (paid by the customers) for the Air Wing is 5170 per bicycle. ZBC is interested in making an imentory plas for 2006 . Toe firm wants to maintain a 95% service level with its coutomers to minimize the losses on the lost ordern. The data collected for the past 2 years are summarized in the following table. A forecast for Diecustien Questions AirWing model sales in 2008 has been developed and will be used to make an inveatory plan for BC. 1. Denelop an inventory plas to help 78C : 2. Discus ROP and total costs. 3. How cen you addeesa demand that in not at the level of the planning horisan? Snumer: hofeswer Kala Chand Scal, Leyola Marymuant Univerity