1. Discuss potential issues with the implementation of your recommendations. What changes or resources would be necessary to implement them, and what decisions might create challenges and require additional leadership attention? Write a few sentences on each recommendation.

Product Orders (Demand) Information
Demand Characteristic	2019	2020
Annual Demand, sets	24,500	26,875
Avg. Weekly Demand	471	517
Variance of Weekly Demand	118	129

Product Forecasting Information
	Actual Demand (three sock sets)	Weighted Moving Avg. Fcst.	Exponential Forecast
2017	19,000	14,500	15,000
2018	22,500	17,750	18,600
2019	26,000	21,450	22,110
2020	29,500	24,950	25,611

Weighted Moving Average uses W_t = 0.7 and W_t-1 =0.3.

Exponential Smoothing uses = 0.9.

Inventory Management Information

The initial inventory for all sock styles combined at the beginning of FY 2021 is 2,250 units. You also have information on current costs, which includes:

• Order cost to Throx for an order placed with its current supplier, $/order = S = $250
• Holding cost per set per per year = H = $1.50
• The company currently pays $6.50 for each set of socks. = P

The company uses a continuous review replenishment policy, and has IT systems in place that allow constant monitoring of key information. Last year, the company used an ROP under this policy of 1,800 units for all sock styles and an order quantity Q of 4,000 units for all sock styles.

Potential Alternatives to Current Supply Chain Management

The company has asked you to evaluate a number of alternatives to their current SCM practices, including at a minimum their choice of supplier, transportation modes, warehouse capacity, order quantities and safety stock.

Alternative Suppliers

The company has contacted potential alternative suppliers in China, who have offered the following information relative to the current supplier:

Supplier Characteristic	Current	Alternative A	Alternative B	Weight
Unit Price, $/3-sock set	6.50	5.75	5	0.4
Order Cost, $/order	250	325	200	0.1
QA Pck	TBD	TBD	TBD	0.3
Financial Condition of the firm	Good	Poor	Fair	0.2

For the quality performance assessment of the suppliers, Throx would like you determine the Capability Index for each Supplier based on the following information. Target Sock Thickness: 6mm +/- 1mm

Transportation Supplier Characteristics	Maersk Ocean Freight (current)	UPS Air Express (alternative)
Unit cost, $/sock set	1.25	3.75
Damage Rate	2.8%	0.5%
Avg. Transit time, weeks	4	0.5

* No data are available about variation in transit times, so Throx assumes this is constant.

Similar to their decision about sourcing, Throx wants to use a single-sourcing strategy for transportation, so they want a recommendation about which mode would be best.

Alternative Warehouse Location

The company would also like to assess whether its current warehouse location is appropriate based on where customers are located. It provides you the following information about its key markets, and indicates that its orders in each market are roughly proportional to the total population.

Market	Population	X	Y
LA - Long Beach	19,800,000	34	118
San Fracisco	8,700,000	38	122
San Diego	5,300,000	33	117
Sacramento	2,500,000	39	121