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Ngo Khanh Duy BTARIU14601

Pham Gia Huy BTFTIU14132

Phan Thi Bao Nhu BABAWE 15334

CASE 4

1. Plot the annual demand for ZBC bicycles in a chart.

**month 2011 2012 Forecast for 2013
**

Jan 6 7 8

Feb 12 14 15

Mar 24 27 31

Apr 46 53 59

May 75 86 97

June 47 54 60

July 30 34 39

Aug 18 21 24

Sep 13 15 16

Oct 12 13 15

Nov 22 25 28

Dec 38 42 47

Total 343 391 439

Annual ZBC demands for Airwig Model 120 100 80 Bicycle 2011 60 2012 Forecast for 2013 40 20 0 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec 2. which does not mean that we are assuming a zero error. we assume the mean of the error distribution to be zero. . Since we assume the forecasts to be unbiased. What is the probability of monthly demand of 37 bicycles? Inventory plan: Average demand per month=439/12=37 bicycles Order cost=$65/order Cost per bike= 170*60=$10200 Holding cost=$10200*1%*12 per year per bicycle=$1224 per year/bicycle Service level=95% z-value = 1.645 Total demand per year=439 units of bicycle Normal Distribution: A normal distribution is only defined by two parameters: its mean and its variance.

24 439 Orders per years are: ≈ 6. What is the time between the orders? How many orders should ZBC place per year? (15 pts) Holding cost = 170 x 60% x 12% = $12. what is the ROP? (10 pts) At 95% level of service. Calculate the ROP and total inventory costs.583 + (1.65 439 Average demand per month = ≈ 36.24 2∗439∗65 EOQ is equal to Q*. (15 pts) At 95% level of service.583 12 Standard deviation of the demand = 25.3.65)*(25.36 ≈ 7 69 7 Time between orders: ≈ 0.67 ROP = 36.9385≈79 units Total inventory cost = holding cost + ordering cost = 12.3 𝑤𝑒𝑒𝑘𝑠 12 4.24 + 65 = 77.67) ≈78.24 5. If the lead time for shipping bicycles from China is 2 months.28 ≈ 69 𝑢𝑛𝑖𝑡𝑠 12.583 ≈ 30. Calculate the EOQ for ZBC. or EOQ = (√ ) ≈ 68.65 . we have Z = 1. we have Z = 1.

65)*(25. Prepare a monthly requirement plan for bicycles for 2013 using EOQ policy (including projected on-hand inventory. Alternatively. order receipts and order releases) (20 pts) Q*.67) ≈115. holding low levels of inventory result in low inventory carrying costs and some (high) stockout costs.583 12 Standard deviation of the demand = 25. Holding high levels of inventory (overstock) result in higher inventory carrying costs and low (or no) stockout costs.583*2 + (1. The fixed-order quantity model is a perpetual system. T.52≈116 units 6. the fixed-order quantity model has no review period. . or EOQ = 69 𝑢𝑛𝑖𝑡𝑠 Place an order of 69 units Months 1 2 3 4 5 6 7 8 9 10 11 12 Gross requirement 8 15 31 59 97 60 39 24 16 15 28 47 On hand: — 7 14 27 53 86 54 34 21 15 13 25 42 Net requirement 1 1 4 6 11 6 5 3 1 2 3 5 Order receipt 69 69 69 69 69 69 Order release 69 69 69 69 69 69 7. Discuss the trade-off between holding costs and lost profit (stockout cost) when selecting an inventory policy. records must be updated to reflect whether the reorder point has been reached. Fixed-time period model has a larger average inventory because it must also protect against stockout during the review period. 439 Average demand per month = ≈ 36. which requires that every time a withdrawal from inventory or an addition to inventory is made.67 ROP = 36. net requirement.

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