Bicycle Retailer (Centralized Inventory)
GreatLake Bicycle is a high-end bike store in Chicago. It has two shops, one in Museum Park, the other is in River North. The cycle service level is set to be 95% in both shops. The weekly demand in Museum Park shop is normally distributed with a mean of 50 and a standard deviation of 25. The weekly demand in River North is normally distributed with a mean of 70 and a standard deviation of 20. Whenever a shop makes a replenishment order, it takes 3 weeks for the bike to arrive at each shop.
(a) If the two shops manager their inventory separately, what is the safety stock in each store? What is the total safety stock?
(b) If GreatLake Bicycle rents a room in downtown Chicago as a central warehouse, serving both shops, what is the safety stock in the central warehouse? The replenishment lead time is still 3 weeks, it takes no time to deliver a bicycle from the central warehouse to the retail shop. Assuming demands are independent.
(c) What if the demands in the two shops are negatively correlated with the correlation coefficient of -0.5? Keep all the other conditions in (b)?
(d) What if the demands in the two shops are perfectly positively correlated? Perfect positive correlation means the correlation coefficient is +0.5.
(a) What is the safety stock in each store?
SS of River North = 100
SS of Museum Park = 125
(b) If GreatLake Bicycle rents a room on IIT DTC campus as a central warehouse, serving both shops, what is the safety stock in the central warehouse? The replenishment lead time is still 3 weeks, it takes no time to deliver a bicycle from the central warehouse to the retail shop. Assuming demands are independent.
SS = 113
(c) What if the demands in the two shops are negatively correlated with the correlation coefficient of -0.5? Keep all the other conditions in (b)?
SS = +10
(d) What if the demands in the two shops are perfectly positively correlated? Perfect positive correlation means the correlation coefficient is +0.5.
SS = +18
Bicycle Retailer (Centralized Inventory) GreatLake Bicycle is a high-end bike store in Chicago. It has two...
KBC is a bike manufacturing company located in Asia which sells two models (a bike with a D-brake and a bike with a V-brake) in the United States. It takes 6 weeks to ship the bikes from their factory in Asia to their distribution center in the United States. The weekly demands for the bikes in the United States market follow Normal distributions as follows (and they are independent): Bikes with D-brakes ~ N(µ=7, σ2 =6^2) Bikes with V-brakes ~...
Consider the following excerpts from a New York Times article: Despite its early promise … Restoration has had trouble becoming a mass-market player … What went wrong? High on its own buzz, the company expanded at breakneck speed, more than doubling the number of stores, to 94, in the year and a half after the stock offering … Company managers agree, for example, that Restoration’s original inventory system, which called for all furniture to be kept at stores instead of...
1.Magazine Luiza is a Brazilian retail chain for consumer electronics. The company currently has 100 stores distributed across Brazil. It also operates an online channel. It is considering introduction of a new printer and must decide whether to offer it at retail stores or the online channel. Weekly demand for the printer at each store has been forecast to be normally distributed with a mean of 100 and a standard deviation of 80. The company has also forecast that the...
Read about Cokes strategy in Africa in the article below and discuss the ethics of selling soft drinks to very poor people. Is this an issue that a company like Coke should consider? Africa: Coke's Last Frontier Sales are flat in developed countries. For Coke to keep growing, Africa is it By Duane Stanford Piles of trash are burning outside the Mamakamau Shop in Uthiru, a suburb of Nairobi, Kenya. Sewage trickles by in an open trench. Across the street,...