Bonus Question: Trace the inventory balance over the course of the year. Assume
ID: 371594 • Letter: B
Question
Bonus Question: Trace the inventory balance over the course of the year. Assume starting inventory balance of 35 bicycles. Also assume that retail orders are called into ZBC the first business day of every month and the first order to ZBC suppliers is on Jan 4, 2016.
Hint: Take into consideration orders to suppliers and supplier lead time, orders from retailers and lead time in shipments to retailers, as well as the estimated time between orders to suppliers. Consider creating a table such as:
Date
Description
Order Amount
Inventory In
Inventory Out
Inventory Balance
Beginning inventory
35
1/4/2016
Monday
Retail order received
8
35
1/4/2016
Monday
Order placed to supplier
EOQ
35
####
XXXXX
Retail order sent out
8
27
####
XXXXX
Supplier order received
EOQ
###
2/1/2016
Monday
Retail order received
15
###
####
XXXXX
Retail order sent out
15
###
####
XXXXX
Order placed to supplier
EOQ
###
What conclusions or recommendations do you draw from tracing the inventory in step 5?
Date
Description
Order Amount
Inventory In
Inventory Out
Inventory Balance
Beginning inventory
35
1/4/2016
Monday
Retail order received
8
35
1/4/2016
Monday
Order placed to supplier
EOQ
35
####
XXXXX
Retail order sent out
8
27
####
XXXXX
Supplier order received
EOQ
###
2/1/2016
Monday
Retail order received
15
###
####
XXXXX
Retail order sent out
15
###
####
XXXXX
Order placed to supplier
EOQ
###
Explanation / Answer
It is assumed that lead time for retail order is one day and lead time for Supplier is two days. EOQ is 35 and reorder is placed after having retail order
Date Description Order Amount Inventory In Inventory Out Inventory Balance Beginning inventory 35 01-04-2016 Monday Retail order received 8 35 01-04-2016 Monday Order placed to supplier EOQ 35 01-05-2016 Tuesday Retail order sent out 8 27 01-06-2016 Wednesday Supplier order received EOQ-35 62 02-01-2016 Monday Retail order received 15 62 02-02-2016 Tuesday Retail order sent out 15 47 02-02-2016 Tuesday Order placed to supplier EOQ 47