Surf Shaper, a surf warehouse in California, serves over 300 surf shops and retailers along the California coast. Surf Shaper places their boards in surf shops on consignment and replaces the consignment stock from their warehouse as boards are sold, typically within three days. Inventory must be carefully managed. If the retail surf shops run out of Surf Shaper boards before the consignment inventory is replaced, sales may be lost as customers choose other boards. Surf Shaper may also lose its "shelf space" within the retailer's shop if its supply chain proves unreliable. For this reason, Surf Shaper strives to maintain a 96% service level with its retailers.

The best-selling board for Surf Shaper is the Grommet, their 8-foot foam wide board suitable for beginners and casual surfers. The Grommet retails for $400, and COGS is $150 per unit. The popularity of the Grommet has been steadily increasing over the past three years. The unit sales report for the past three years is displayed below.

The Grommet is manufactured in Thailand. Orders take 30 days to arrive via sea freight. With the costs of communications, customs, and freight, each order placed costs $935. Once the boards arrive at the warehouse, the inventory carrying cost is 15% per year/unit of the COGS.

Month 2018 2019 2020 January 790 853 929 February 800 864 944 March 1,300 1,404 1,544 April 1,560 1,685 1,943 May 1,620 1,750 2,469 June 1,970 2,128 2,584 July 2,140 2,311 2,539 August 2,230 2,408 2,541 September 1,560 1,685 2,426 October 1,280 1,382 1,573 November 1,070 1,156 1,271 December 940 1,015 976 Total 17,260 18,641 21,740