Overview of the Case Analysis We have discussed many concepts in SCM 301 related to planning, sourcing, making and delivering products and services. The purpose of this case analysis is to integrate the different elements of the course and to apply tools you have learned evaluate the supply chain performance. Consider yourself a summer intern and your summer assignment is to put all you learned in SCM 301 to good use helping the Throx company evaluate their current supply chain practices. You are tasked with evaluating the company's recent performance and recommending changes (decisions) to improve supply chain management performance. The questions that you are required to answer are attached to the end of this case. Company Background Information Throx sells higher-end custom-design socks in three-sock sets (rather than two). The company operates from a small packaging and distribution facility in Richmond, CA from which it ships product to customers. Given the company's location and focus, 97% of sales are in California, primarily in the major urban areas of the San Francisco bay area, Los Angeles, Sacramento (and last but not least) San Diego. The company sells exclusively via online sales, at an average price of $ lS/three-sock set, plus shipping costs charged to the customer. The company currently orders its product from the Chinese sock manufacturer Zhejiang Datang Hosiery Group Co., Ltd in so-called \"Sock City." Socks are shipped via truck to the port of Shanghai, from where they are shipped to the port at Los AngelesLong Beach via ocean freight. Once ofoaded in Los Angeles-Long Beach, the socks are shipped via truck to the Richmond facility. On average, shipment from the manufacturer to the Richmond facility takes 4 weeks. In addition to the transit time required for shipment, the lead time from when an order is placed with the manufacturer to when it is shipped from Zhejiang is 3 weeks. So, the total lead time is considered to be 7 weeks from when Throx places an order until it reaches the Richmond facility. Historically, the standard deviation of lead time has been 1.5 weeks. Product Orders (Demand) Information The company provides you with the following information for the past two scal years: Demand Characteristic 2019 2020 Annual Demand, sets 26,918 31,763 Average Weekly Demand 518 611 Standard Deviation of weekly Demand 130 153 Product Forecasting Information Throx uses two main forecasting methods based on annual data to predict orders for the following year, a weighted moving average and exponential smoothing. They provide you with the following information about forecasts for FY 2017 through FY2020: Actual Demand Weighted Moving Exponential (Three Sock Sets) Average Fest Forecast 2017 16,300 2018 22,432 17,060 18,340 2019 26,918 ' 20,614 21,613 2020 31,763 ' 24,765 25,857 Weighted Moving Average uses W, = 0.6, W,_1=0.3 Wu =0.1 Exponential Smoothing uses or = 0.8. 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: 0 Order cost to \"Host for an order placed with its current supplier, 5;! order = S = $275 0 Holding cost per set per year = H = $2.25 0 The company currently pays (P) $7.25 for each set of socks 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 2,200 units for all sock styles and an order quantity Q of 5,000 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 sun lier: Supplier Characteristic _M Unit Price, 5/3-sock set 5 7.25 s 6.00 s 5.50 1\" Order cost, Slorder $ 300 Financial condition of the firm For the quality performance assessment of the suppliers, Throx would like you determine the Capability Index CPk for each Supplier based on the following information. Alternative Alternative Measures in mm Current A B Mean Sock Thickness 5.30 5.8 i 6.1 Standard Deviation 0.15 0.12 i 0.10 Alternative Transportation An alternative to their current transportation approach available to Throx is shipment by UPS Express Air from Shanghai to Richmond, which averages 3.5 days. The comparison of costs is given as: Maersk Ocean Freight UPS AirExpress Trans poration Supplier Characteristics (current) [Alternative] Units cost, $/sock set Damage Rate Average Tra nsit time, weeks\" * No data is available about variation in transit times for air, 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. NOTE: Ignore the current port capacity issues when making your decision! recommendation 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 m Population - LA-Lon. Beach 16,800,000 \" 8,900,000 \" 6,300,000 3,500,000 The document should be submitted as a Word document, with the lename: LASTNAME_Final.docx (-5 points if not named with this format) For example, my submission would be Coyle_Final.docx No late submissions will be accepted for any portion of this project. No late submission for the final version can be accepted due to deadlines for course grade submission. Please plan accordingly. For each question below complete the required calculations utilizing the tools you learned in SCM 301 providing a summary or table of your calculations. In addition, provide a few summary bullet points explaining your obscrvationsfrationale and supporting your conclusions and recommendations. This may be turned in utilizing Word or Excel. I recommend you include your work to enable partial credit. Case Questions 1) Calculate measures of forecast accuracy: MFE, MAD and MAPE using the data from FY20]? through FY2020. a) Which forecast is more accurate? b) Do these forecasts seem adequate for the purposes of decision making? Why or why not? Note unlike your homeworldtests where we utilized multiple months this is just for the four years (treat them like months). 2) Develop a forecast for FY2021 using the two forecasting methods currently employed by the company. Comment on which of the forecasts is likely to be more appropriate to support decisions based on your assessment of forecast accuracy from Q1. Are there any other considerations that you would recommend to Throx. 3) This question will have you calculating 2 different EOQ and ROP values and interpreting the results. For both EOQ and ROP, give your nal answer in full sock sets (ROUND UP to the next whole number). The specific questions to answer are based in parts a-c. Tips to solve the EOQ and ROP are given below in bullet points. a) Calculate EOQ and ROP for FY2020 based on the FY2020 forecast value that you determined to be most accurate in Question #1. b) Calculate the EOQ and ROP based upon actual demand for FY2020 c) Use the total inventory cost calculation to detemiine total inventory costs for each of the three EOQ results: EOQ from part a, EOQ from part b, and the Q that Throx is currently using (given in the case) When determining the costs use 2020 actuals for your Demand (D) for all three scenarios. i. Compare the total inventory costs from the three results and analyze what it shows you. ii. What are the implications of the ROP Throx is currently using versus the ROP based on Actual Demand. . See additional tips below: 4) 5) 6) 7) 3) I Use a service level of 95% (z=1.65) when calculating the ROP I For the standard deviation of weekly demand, use the data provided in the table on page 2 of the case with the FY2020 forecast for all approaches. I Annual Inventory management costs will include the following: Annual Holding Costs, Annual Ordering Costs, and Purchase Cost. Indicate which of the three suppliers should be used for FY2021. Develop a supplier scorecard using the following scale: 3=best, 2=second best, l=worst and the weights provided in the case to support your selection. Are there any concerns Throx should consider with your selection? a) Remember for your quality rating you must first determine the Capability Index (CPk) for each supplier. Remember show your CPk results Indicate which transportation mode should be used for FY2021. a) You must complete an analysis of the annual transportation costs. b) When supporting your recommendation, be sure to discuss other implications (such as inventory levels, safety stock, and the resulting costs) to supporu'justify your recommendation. Calculate EOQ and ROP values for FY2021 based on your forecast from Question 2 and recommendations for their sock supplier and transportation company from Question 4 & S. (TIP: The selected supplier may change your S and P values.) Give your nal answer in ll] sock sets {ROUND UP to the next whole number). What are the expected costs for inventory management based on your decisions? How does this compare to company's current policy for Q & ROP if they maintain that approach for the 2021 business plan? Determine the 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 inuence the choice of a specic location once the (XX) coordinates have been identied. Discuss considerations and potential issues with the implementation for each of your recommendations: 2021 forecast, EOQ &ROP, Supplier, Transportation , and Location 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