The Grommet is manufactured in Thailand. Orders take 30 days to arrive via sea freight. With the costs of communications, customs, and freight, each order placed incurs an expenditure of $935. Once the boards arrive at the warehouse, the inventory carrying cost is 15% per year/per unit of the COGS. Based on the information provided in this case study, you will create a 2021 inventory plan for Surf Shaper. Using the spreadsheet provided and the formulas you learned and practiced last week.
1. Create a Sales Forecast showing a 15% increase in sales over 2020.
2. Using your 2021 Sales Forecast, determine the amount of Safety Stock Surf Shapers should keep on hand to meet their service level goal.
3. Utilizing the EOQ method, identify:
a. The optimal order quantity (0)
b. The number of orders to be completed
c. The Re-Order Point
d. Total ordering cost
The best-selling board for Surf Shaper is the Grommet, their 8-foot foam wide board, that is suitable for beginners and casual surfers. The Grommet retails for $400, and COGS is $150 per unit. The popularity of the Grommet has been steadily increasing over the past three years. The unit sales report is displayed below.
2018 2019 2020
January 790 853 929
February 800 864 944
March 1,300 1,404 1,544
April 1,560 1,685 1,943
May 1,620 1,750 2,469
June 1,970 2,128 2,584
July 2,140 2,311 2,539
August 2,230 2,408 2,541
September 1,560 1,685 2,426
October 1,280 1,382 1,573
November 1,070 1,156 1,271
December 940 1,015 976
Total 17,260 18,641 21,740