Solved by verified expert:Compose a response to the case study discussion questions.Prepare a brief report as instructed in the case study.please answer the attached question based on our book.Quantitative Analysis for Management (12th Edition)Render, Barry
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Martin-Pullin Bicycle Corporation
Martin-Pullin Bicycle Corp. (MPBC), located in Dallas, is a wholesale distributor
of bicycles and bicycle parts. Formed in 1981 by cousins Ray Martin and Jim Pullin, the
firm’s primary retail outlets are located within a 400-mile radius of the distribution
center. These retail outlets receive the order from Martin-Pullin within two 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 MPBC loses that 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. MPBC receives all the
models from a single manufacturer overseas, and shipment takes as long as four weeks
from the time an order is placed. With the cost of communication, paperwork, and
customs clearance included, MPBC estimates that each time an order is placed, it incurs a
cost of $85. The purchase price paid by MPBC, per bicycle, is roughly 65% of the
suggested retail price for all the styles available, and the inventory carrying cost is 2% per
month (24% per year) of the purchase price paid by MPBC. The retail price (paid by the
customers) for the AirWing is $250 per bicycle.
MPBC is interested in making an inventory plan for 2014. 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 two years are summarized in the table below. A forecast
for AirWing model sales in the upcoming year, 2014 has been developed and will be used
to make an inventory plan for MPBC.
Discussion Questions
1.
2.
3.
4.
Develop an inventory plan to help MPBC.
Discuss ROPs and total costs.
How do you handle the fact that the Reorder Point is larger than the EOQ?
How can you address demand that is not at the level of the planning horizon?
Month
January
February
March
April
May
June
July
August
September
October
November
December
Total
Demand for AirWing Model
2012
2013
Forecast for2014
6
7
9
12
14
16
24
27
31
46
53
59
75
86
96
47
54
61
30
34
39
18
21
24
13
15
17
12
13
15
22
25
29
38
42
46
343
391
443
…
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