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nventory Activity PART A Speedy Bicycle Company ( SBC ) is a wholesale distributor of a wide variety of bicycles and bicycle parts. The most
nventory Activity
PART A
Speedy Bicycle Company SBC is a wholesale distributor of a wide variety of bicycles and bicycle parts. The most popular model is
the Dragonfly, which sells for $ All manufacturing is done at a plant in China, and shipment takes a month days from the
time an order is placed. The estimated order cost is $ including customs clearance. SBCs cost per bicycle is of selling price,
and inventory carrying cost is per year of SBCs cost If the company cannot fulfill a retail order, the retailer will get the
shipment from another distributor and SBC loses that business. SBC is planning inventory for based on forecasted demand and
wants to maintain a service level to minimize lost orders. The company has working days per year.
Forecasted Demand for the Dragonfly Bicycle Model:
J F M A M J J A S O N D
Develop an inventory plan for the Dragonfly model. Canvas responses shown in red.
Get organized:
Order cost $ per order
Cost per bicycle $round to nearest cent
Annual holding cost per bicycle $round to nearest cent
Service level so z
Lead time days
Annual demand for bicycles
Answer:
What is the economic order quantity? Q round to nearest whole number
If average demand during lead time is normally distributed with a standard deviation of bicycles, what is the reorder point
with the desired service level?
Safety stock bicycles ROP bicycles round both to nearest whole number
What is the total annual inventory cost including safety stock? $round to nearest dollar
If SBC is currently ordering bicycles at a time, how much is the company overpaying in total inventory cost?
$round to nearest dollar
Each year during their anniversary celebration, SBC offers a collectable water bottle at the special price of $ They typically sell
bottles with a standard deviation of bottles. The cost of each bottle is $ and any unsold inventory is donated to a local
charity. What is the service level and optimal order quantity for the water bottles?
Service level Optimal order quantity
What is the Dragonflys ADV round to nearest decimal If SBCs total inventory based on ADV is $ what percent of the
total inventory based on ADV does the Dragonfly represent? nearest whole percent
If SBCs COGS on its income statement is $ and its balance sheet lists inventory at $ what is its IT If the industry
average is weeks of supply, how does SBC compare better or worse
MORE
Part B
After watching this minute video from WSJ Why Everything Is On Sale: The Bullwhip Effect answer the following:
The chart showed that retailers traditionally balance with by maintaining a salesinventory ratio of about Now
that ratio is about which means inventory turnover.
The bullwhip effect was demonstrated in the leisure apparel example by demand through the supply chain and
when it was supposed to hit the store shelves. In the past, this type of inventory and the bullwhip effect have been fair
indicators for but globalization has made it more difficult to forecast. Sales could mean good news because of
or bad news because of
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