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
- 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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