Case Study Northcutt Bikes: The Service Department
1. Use the available data to develop inventory policies (order quantities and reorder points) for the FB378 and GS131. Assume that the holding cost is 20% of unit price.
2. Compare the inventory costs associated with your suggested order quantities with those of the current order quantities. What can you conclude?
3. Do you think the lost customer sales should be included as a cost of inventory? How would such an inclusion impact the ordering policies you established in question 1?