Question

Zhou Bicycle Company (ZBC), located in Vancouver, is a wholesale distributor of bicycles and bicycle parts. The retail outlets receive the order from ZBC within 5 days after notifying the distribution Centre. The company receives all the models from a single manufacturer in China and shipment takes as long as 10 days from the time an order is placed. With the cost of communication, paper work, and custom clearance included, ZBC estimates that each time an order is placed, it incurs a cost of $85. The purchase price paid by ZBC is roughly 65% of the suggested retail price for all the available styles, and holding cost is 2% per month of the purchased price paid by ZBC. The retail price (paid by customer) is $190 per bicycle. ZBC is interested in making an inventory plan for 2018. The firm wants to maintain 97% service level with its customer to minimize the losses on the lost orders. The data collected from last 3 years are summarized in below table. (note: we assume there are 365 days a year)

a) First develop the forecast for 2018 by considering seasonality and trend approach.

b) Develop inventory plan to help ZBC for 2018.

c) Discuss ROP, Safety Stock.

d) Find total costs for 2018 (Including ordering cost, holding cost, safety stock keeping cost.

Year	Quarter	Actual Demand
2015	I	600
	II	3,550
	III	1,500
	IV	1,200
2016	I	700
	II	3,100
	III	1,600
	IV	900
2017	I	800
	II	4,500
	III	2,300
	IV	1,900