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Indicate an appropriate location for a new facility if one is to be built using the weighted center of gravity approach. Round your final coordinates

  1. Indicate an appropriate location for a new facility if one is to be built using the weighted center of gravity approach. Round your final coordinates (X, Y) to two decimal places. Discuss other relevant factors that would influence the choice of a specific location once the (X,Y) coordinates have been identified.
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 Wt = 0.7 and Wt-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

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