ByNivedita - 09020241076 Mansi - 09020241087 Dylan - 09020241072Vivek S - 09020241094 Vivek K - 09020241102Terry R - 09020241101

Whole Sale distributor of bicycles and bicycle parts. Its primary retail outlets are located within an area

of 1000 sq km. i.e. a radius of approx 18 km. Receives all its bicycles of different models from a

single manufacturer in China. The major selling model of bicycle at Miracle Mind is

the “ Road King”.

n

Miracle Mind Company

(distributor)

Manufacturer in China

Retail outlets

Alternate distributor of bicycles

Step 1: Order placed

Order dispatched in 2 days

Is stock available

?

YES

NO

Retailer informed, & he places the order with an alternate distributor

Shipment received in 4 to 4.5 weeks

Shipment of orders from China to MC takes 4 to 4.5 weeks

Order Cost: Rs. 1000 per order Purchase price per order by MC: 75% of MRP for all models ~ Rs 900 Inventory Carrying Cost: 20% of the purchase price

per year. Average Retail Price for Road King: Rs. 1200

Months Actual Sales for 2003

Actual sales for 2004

Predicted demand for 2005

January 1216 1217 1218

February 1222 1224 1225

March 1234 1238 1241

April 1240 1245 1255

May 1260 1270 1278

June 1239 1234 1250

July 1235 1244 1251

August 1236 1235 1239

September 1228 1231 1230

October 1218 1231 1254

November 1225 1230 1235

December 1230 1235 1245

The predicted Annual Demand for 2005: 14921 Order Cost: 1000 per order Purchase Price : Rs. 900 Avg. retail Price: Rs. 1200 Inventory Carrying Cost: 20% of (14921*1200)

To maintain a 99% service level with its customers to minimize losses on lost orders.

1) Issues from SCM point of view?

2) How to resolve these issues?

3) To develop a comprehensive supply chain strategy for MC.

The inventory management is not efficient as orders are lost due to unavailability of stock.

No back up order.

A Probable lack of required storage capacity.

Insufficient information exchange with the retailers.

Lack of consistent fulfillment of Retailer demand might result in diminished retailer loyalty.

Lack of proper understanding of Retailer requirements.

High delivery time from manufacturer (china) to

MC.

To increase the inventory in proportion to the order loss by determining order fulfillment ratio.

To increase the Storage capacity &order frequency with the manufacturer.

To have a daily exchange of information with retailer through online communication.

To determine the Segregated demand of bicycles model-wise, area-wise and creation of forecast database.

To plan the inventory of fast and slow moving models.

Information:To improve the information exchange between the retailer and distributor in terms of bi-weekly demand requirements.

To use demand forecasting tools which may calculate demand on quarterly, half yearly, yearly averages etc.

Transportation: To reduce the delivery time from MC to retailer by bucketing the orders and using milk-van run.

The retailer should keep a buffer stock to satisfy any excess demands immediately(as 99% service level is to be achieved i.e. 6 sigma).

In order to avoid loses due to lack of stock, the order frequency needs to be improved with the help of the information received in the monthly sales report of the retailers.

Contingency plan should be incorporated in case of transport strikes, dock strikes etc.