**I need help with question 8 please**

**I need help with question 8 please**

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 $18/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 Angeles-Long Beach via ocean freight. Once offloaded 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 fiscal years: Demand Characteristic Annual Demand, sets Average Weekly Demand 2019 2020 26,450 29,940 509 576 Std Dev of weekly Demand 127 144 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 Fcst Forecast 2017 18,500 14,500 2018 22,875 17,750 2019 26,450 21,563 2020 29,940 25,378 Weighted Moving Average uses W= 0.7 and W-1=0.3 Exponential Smoothing uses a = 0.8. 15,000 17,800 21,860 25,532 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 - $275 Holding cost per set per year-H-$1.75 The company currently pays $6.80 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 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 supplier: Supplier Characteristic Alternative A Alternative B Weight Current 6.80 $ 275 $ 6.10 Unit Price, $/3-sock set Order cost, $/order 0.4 220 0.2 QA CPK TBD TBD TBD 0.2 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 CPK for each Supplier based on the following information. Throx considers it critical that the suppliers can meet their minimum Sock Thickness: 6mm Alternative Alternative Current A B Measures in mm Mean Sock Thickness 6.5 6.2 6.7 Standard Deviation 0.15 0.11 0.18 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 (current) UPS AirExpress (Alternative) Transporation Supplier Characteristics Units cost, $/sock set $ 2.75 $ 4.75 Damage Rate 0.5% 2.8% 4 Average Transit time, weeks* 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. NOTE: Ignore the current port capacity issues when making your decision/ recommendation Alternative Warehouse Location Population X Y Market LA-Long Beach 15,800,000 34 118 San Francisco 38 122 8,700,000 4,500,000 2,500,000 33 San Diego Sacramento 117 39 121 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. $ $ 6.00 $ 325 $ Case Questions 1) Calculate measures of forecast accuracy: MFE, MAD and MAPE using the data from FY2017 through FY2020. Which forecast is more accurate? Do these forecasts seem adequate for the purposes of decision making? Why or why not? Note unlike your homework/tests where we utilized multiple months this is just for the four years (treat them like months). Tear Actual Demand weighted Moving Average Forecast Error Absolute Error Percentage Emor Exponentiall Forecast Emer 4550 Absouline Ener 3800 2019 4550 1600 29500 21450 24950 17.50% 15.42% 22110 25611 Percentage Error 3890 14.96% 3889 13.18% 2020 3889 4550 4550 16.46% 3889.5 3889.5 MFE 14.07% MAPE MAD MAPE MFE MAD The approach that leads to a greater MFE, MAD, and MAPE is not as accurate than the method with the lower numbers. The exponential smoothing method will be better at forecasting than the method of linear smoothing. 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? Year Actual Demand Weighted Moving Average Forecast Exponential Forecast 2019 26000 21450 22110 2020 29500 24950 26511 2021 28450 29111.1 Forecasts using exponential smoothing are more accurate than those using the weighted moving average. This is because they have less error and variance than forecasts using the weighted moving average. Because of this, I would recommend that Throx uses the exponential smoothing method and use demand for decision making purposes. 3) This question will have you calculating 2 different EOQ and ROP values and interpreting the results. For both EOQ and ROP, give your final 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. EOQ (2 x 25,611 x 250 / 1.50) = 2,922 ROP (512.22 x 7) + (1.65 X 513.19) - 4,433 b) Calculate the EOQ and ROP based upon actual demand for FY2020 EOQ (2 x 29,500 x 250 / 1.50) = 3,136 ROP (567 x 7) + (1.65 x 567.88) = 4,906 4550 c) Use the total inventory cost calculation to determine 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 i. Compare the total inventory costs from the three results and analyze what it shows you. The overall cost with the real demand method is greater when compared to the predicted method ii. What are the implications of the ROP Throx is currently using versus the ROP based on Actual Demand? The ROP Throx is currently using is lower than the ROP based on actual demand Use a service level of 95% (z-1.65) when calculating the ROP 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. Annual Inventory management costs will include the following: Annual Holding Costs, Annual Ordering Costs, and Purchase Cost. Total cost of exponential forecast: (25,611/2921.81) x 250+ (2921.91/2) x 1.50 +25,611 x 6.50 = 170,854 Total cost of actual demand: (29,500/3135.81) 250+ (3135.81/2) x 1.50 +29,500 x 6.50 196,454 Current Q = 5,000 d) See additional tips below: 4) Indicate which of the three suppliers should be used for FY2021. Develop a supplier scorecard using the following scale: 3-best, 2-second best, 1-worst and the weights provided in the case to support your selection. Remember for your quality rating you must first determine the Capability Index (CPK) for each supplier. Remember show your CPK results Supplier Characteristic Weight Current supplier Alternative Alternative Supplier B Supplier A Unit price 4 6.50 (1.2) 5.75 (4) 5 (8) Order cost 250-(3) 325 (1) 200-(2) Defect rate 2.8% - (9) .5% -(.3) Good Poor Financial condition of the .5% -(-6) Fair 2-(4) 2 firm 3-(-6) 3 1-(2) 1 Total score 5) Indicate which transportation mode should be used for FY2021. You must complete an analysis of the transportation costs. When supporting your recommendation, be sure to discuss other implications (such as inventory levels, safety stock, and the resulting costs) to support/justify your recommendation. We can assume safety stock to be zero because there is no variation in lead time and the demand variability is not given II-carrying cost per week per unit Maersk: 1.5 +1.5 x 2% + 4H 1.53 + 4H UPS AirExpress: 2.75 +2.75 x 0.SH 2.764 +0.5H Comparing using $100 per 100 units Current option USA AirExpress. $10000 Cost of stock 100 x 100 $10000 1.35 x 100 units = $135 Freight 3.95 x 100 $395 100 units 0.5% x 100 S per unit - $50 Damage 100 units x 2.8% x $100 per unit - $280 Blockage 10000 x 10% x 4/52= $76.92 10000 x 10% x 0.5 / 52 = $9.61 $491.92 $454.61 Total cost AirExpress is cheaper and therefore should be the transportation mode used in FY2021 .1 3 2 $9 6) 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 & 5. (TIP: The selected supplier may change your S and P values.) Give your final answer in full 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? EOQ = (2DS/H) = (2 x 25,379 x 350/5) = 1884.96 (508.41) = ((7 x 120) + (507.582) x 1) ROP 507.58 x 7+ 1.65 x 508.41-4391.93 Total cost for exponential: (25379 / 1884.96) x 350 + (1884.96/2) x 5 +(25379 x 4) - 110941 Total cost for actual demand: (29975/2048.54) x 350+ (2048.54/2) x 5+(29975 x 4) = 130143 Exponential forecast is more accurate in this scenario because it has a lower cost 7) 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 influence the choice of a specific location once the (X,Y) coordinates have been identified. (34 x 15,800,000)+(38 x 8,700,000) + (33 x 4,500,000)+(39 x 2,500,000)/(15,800,000 +8,700,000+ 4,500,000+2,500,000)=111,380,000/31,500,000 = 35.36 (118 x 15,000,000) + (122 x 8,700,000)+(117 x 4,500,000)+(121 x 2,500,000)/ (15,800,000+8,700,000+ 4,500,000 +2,500,000)-3,754,800,000/31,500,000 - 119.2 X-35.36 Y-119.2 Other factors that would influence the location would be the primary locations of consumers. It is important to take into account where there is a high number of customers purchasing the product, and as we know, these areas are largely the Bay Area, LA, Sacramento, and San Diego. But even with this information, we can still narrow it down to which of these areas is producing the most consumers. This information will help to determine where the new facility should open. 8) 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. 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 $18/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 Angeles-Long Beach via ocean freight. Once offloaded 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 fiscal years: Demand Characteristic Annual Demand, sets Average Weekly Demand 2019 2020 26,450 29,940 509 576 Std Dev of weekly Demand 127 144 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 Fcst Forecast 2017 18,500 14,500 2018 22,875 17,750 2019 26,450 21,563 2020 29,940 25,378 Weighted Moving Average uses W= 0.7 and W-1=0.3 Exponential Smoothing uses a = 0.8. 15,000 17,800 21,860 25,532 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 - $275 Holding cost per set per year-H-$1.75 The company currently pays $6.80 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 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 supplier: Supplier Characteristic Alternative A Alternative B Weight Current 6.80 $ 275 $ 6.10 Unit Price, $/3-sock set Order cost, $/order 0.4 220 0.2 QA CPK TBD TBD TBD 0.2 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 CPK for each Supplier based on the following information. Throx considers it critical that the suppliers can meet their minimum Sock Thickness: 6mm Alternative Alternative Current A B Measures in mm Mean Sock Thickness 6.5 6.2 6.7 Standard Deviation 0.15 0.11 0.18 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 (current) UPS AirExpress (Alternative) Transporation Supplier Characteristics Units cost, $/sock set $ 2.75 $ 4.75 Damage Rate 0.5% 2.8% 4 Average Transit time, weeks* 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. NOTE: Ignore the current port capacity issues when making your decision/ recommendation Alternative Warehouse Location Population X Y Market LA-Long Beach 15,800,000 34 118 San Francisco 38 122 8,700,000 4,500,000 2,500,000 33 San Diego Sacramento 117 39 121 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. $ $ 6.00 $ 325 $ Case Questions 1) Calculate measures of forecast accuracy: MFE, MAD and MAPE using the data from FY2017 through FY2020. Which forecast is more accurate? Do these forecasts seem adequate for the purposes of decision making? Why or why not? Note unlike your homework/tests where we utilized multiple months this is just for the four years (treat them like months). Tear Actual Demand weighted Moving Average Forecast Error Absolute Error Percentage Emor Exponentiall Forecast Emer 4550 Absouline Ener 3800 2019 4550 1600 29500 21450 24950 17.50% 15.42% 22110 25611 Percentage Error 3890 14.96% 3889 13.18% 2020 3889 4550 4550 16.46% 3889.5 3889.5 MFE 14.07% MAPE MAD MAPE MFE MAD The approach that leads to a greater MFE, MAD, and MAPE is not as accurate than the method with the lower numbers. The exponential smoothing method will be better at forecasting than the method of linear smoothing. 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? Year Actual Demand Weighted Moving Average Forecast Exponential Forecast 2019 26000 21450 22110 2020 29500 24950 26511 2021 28450 29111.1 Forecasts using exponential smoothing are more accurate than those using the weighted moving average. This is because they have less error and variance than forecasts using the weighted moving average. Because of this, I would recommend that Throx uses the exponential smoothing method and use demand for decision making purposes. 3) This question will have you calculating 2 different EOQ and ROP values and interpreting the results. For both EOQ and ROP, give your final 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. EOQ (2 x 25,611 x 250 / 1.50) = 2,922 ROP (512.22 x 7) + (1.65 X 513.19) - 4,433 b) Calculate the EOQ and ROP based upon actual demand for FY2020 EOQ (2 x 29,500 x 250 / 1.50) = 3,136 ROP (567 x 7) + (1.65 x 567.88) = 4,906 4550 c) Use the total inventory cost calculation to determine 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 i. Compare the total inventory costs from the three results and analyze what it shows you. The overall cost with the real demand method is greater when compared to the predicted method ii. What are the implications of the ROP Throx is currently using versus the ROP based on Actual Demand? The ROP Throx is currently using is lower than the ROP based on actual demand Use a service level of 95% (z-1.65) when calculating the ROP 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. Annual Inventory management costs will include the following: Annual Holding Costs, Annual Ordering Costs, and Purchase Cost. Total cost of exponential forecast: (25,611/2921.81) x 250+ (2921.91/2) x 1.50 +25,611 x 6.50 = 170,854 Total cost of actual demand: (29,500/3135.81) 250+ (3135.81/2) x 1.50 +29,500 x 6.50 196,454 Current Q = 5,000 d) See additional tips below: 4) Indicate which of the three suppliers should be used for FY2021. Develop a supplier scorecard using the following scale: 3-best, 2-second best, 1-worst and the weights provided in the case to support your selection. Remember for your quality rating you must first determine the Capability Index (CPK) for each supplier. Remember show your CPK results Supplier Characteristic Weight Current supplier Alternative Alternative Supplier B Supplier A Unit price 4 6.50 (1.2) 5.75 (4) 5 (8) Order cost 250-(3) 325 (1) 200-(2) Defect rate 2.8% - (9) .5% -(.3) Good Poor Financial condition of the .5% -(-6) Fair 2-(4) 2 firm 3-(-6) 3 1-(2) 1 Total score 5) Indicate which transportation mode should be used for FY2021. You must complete an analysis of the transportation costs. When supporting your recommendation, be sure to discuss other implications (such as inventory levels, safety stock, and the resulting costs) to support/justify your recommendation. We can assume safety stock to be zero because there is no variation in lead time and the demand variability is not given II-carrying cost per week per unit Maersk: 1.5 +1.5 x 2% + 4H 1.53 + 4H UPS AirExpress: 2.75 +2.75 x 0.SH 2.764 +0.5H Comparing using $100 per 100 units Current option USA AirExpress. $10000 Cost of stock 100 x 100 $10000 1.35 x 100 units = $135 Freight 3.95 x 100 $395 100 units 0.5% x 100 S per unit - $50 Damage 100 units x 2.8% x $100 per unit - $280 Blockage 10000 x 10% x 4/52= $76.92 10000 x 10% x 0.5 / 52 = $9.61 $491.92 $454.61 Total cost AirExpress is cheaper and therefore should be the transportation mode used in FY2021 .1 3 2 $9 6) 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 & 5. (TIP: The selected supplier may change your S and P values.) Give your final answer in full 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? EOQ = (2DS/H) = (2 x 25,379 x 350/5) = 1884.96 (508.41) = ((7 x 120) + (507.582) x 1) ROP 507.58 x 7+ 1.65 x 508.41-4391.93 Total cost for exponential: (25379 / 1884.96) x 350 + (1884.96/2) x 5 +(25379 x 4) - 110941 Total cost for actual demand: (29975/2048.54) x 350+ (2048.54/2) x 5+(29975 x 4) = 130143 Exponential forecast is more accurate in this scenario because it has a lower cost 7) 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 influence the choice of a specific location once the (X,Y) coordinates have been identified. (34 x 15,800,000)+(38 x 8,700,000) + (33 x 4,500,000)+(39 x 2,500,000)/(15,800,000 +8,700,000+ 4,500,000+2,500,000)=111,380,000/31,500,000 = 35.36 (118 x 15,000,000) + (122 x 8,700,000)+(117 x 4,500,000)+(121 x 2,500,000)/ (15,800,000+8,700,000+ 4,500,000 +2,500,000)-3,754,800,000/31,500,000 - 119.2 X-35.36 Y-119.2 Other factors that would influence the location would be the primary locations of consumers. It is important to take into account where there is a high number of customers purchasing the product, and as we know, these areas are largely the Bay Area, LA, Sacramento, and San Diego. But even with this information, we can still narrow it down to which of these areas is producing the most consumers. This information will help to determine where the new facility should open. 8) 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