question archive Shimano Racing Bike Company (SH), located in Seattle, is a wholesale distributor of bicycles and bicycle parts
Shimano Racing Bike Company (SH), located in Seattle, is a wholesale distributor of bicycles and bicycle parts
Subject:ManagementPrice: Bought3
Shimano Racing Bike Company (SH), located in Seattle, is a wholesale distributor of bicycles and bicycle parts. Formed in 1981 by University of Washington Professor Yong Pin Zhou, the firm’s primary retail outlets are located within a 400 mile radius of the distribution center. These retail outlets receive the order from SH within 2 days after notifying the distribution center, provided that the stock is available. However, if an order is not fulfilled by the company, no backorder is placed; the retailers arrange to get their shipment from other distributors, and SH loses the amount of business.
The company distributes a wide variety of bicycles. The most popular model, and the major source of revenue to the company, is the AirWing. SH receives all the models from a single manufacturer in China, and shipment takes as long as 4 weeks from the time an order is placed. With the cost of communication, paperwork and customs clearance included, SH estimates that each time an order is placed, it incurs a cost of $65. The purchase price paid by SH, per bicycle, is roughly 60% of the suggested retail price for all the styles available, and the inventory carrying cost is 1% per month (12% per year) of the purchase price paid by SH. The retail price (paid by the customers) for the AirWing is $170 per bicycle. SH is interested in making an inventory plan for 2013. The firm wants to maintain a 95% service level with its customers to minimize the losses on the lost orders. The data collected for the past 2 years are summarized in the preceding table. A forecast for Air Wing model sales in 2013 has been developed and will be used to make an inventory plan for SH.
Demands for AirWing Model
|
Month |
2011 |
2012 |
Forecast 2013 |
|
January |
6 |
7 |
8 |
|
February |
12 |
14 |
15 |
|
March |
24 |
27 |
31 |
|
April |
46 |
53 |
59 |
|
May |
75 |
86 |
97 |
|
June |
47 |
54 |
60 |
|
July |
30 |
34 |
39 |
|
August |
18 |
21 |
24 |
|
September |
13 |
15 |
16 |
|
October |
12 |
13 |
15 |
|
November |
22 |
25 |
28 |
|
December |
38 |
42 |
47 |
Required:
i. Develop an inventory plan to help SH (15 marks)
