Final Project Deliverable to Throx

Submission Requirements / Breakdown

You will be submitting portions of this project throughout the semester, that I have titled Draft 1, Draft 2 and Draft 3. These will be graded and

returned to you. It is expected that you take the feedback from these drafts and incorporate the necessary changes into the final document that you

submit. The 100 points for the final project will be broken down as follows:

Draft 1: For this draft, you will submit answers for Questions 1 and 2. You must show the work for the forecasts and forecast errors.

Draft 2: For this draft, you will submit answers for Questions 3 and 4. You must show the work for the EOQ and ROP models, as well as all cost


Draft 3: This draft will include answers for Question 5, parts a through d. You must show the work for each section.

** NOTE: It is expected that you will take the feedback from Drafts 1, 2 & 3 and incorporate these into your final submission. If you have any

questions about the feedback or are still unsure how to complete a question, please ask.

Final: This will be the final submission for the case. You will include answers for all questions, including Question 6. The final document

should be 4 pages or less (double-spaced, 12-point font, 1” margins) that addresses each of the questions. There’s no need to write a “formal”

paper. You may write the questions number and then answer each question in a few sentences. All work that supports your answers should be attached

in an appendix. The appendix will not count towards your 4 page limit. Also, you may scan and post a separate file with your work if that’s


Due Dates & Document Submission

All submissions are due by 11:59 PM EST on the due date in the above table. Files should be submitted in Canvas. You will find an assignment for

each draft of the paper in the Final Project Module.

The document should be submitted as a Word document, with the filename:

LASTNAME_DraftX.docx(-2 points if not named with this format)
LASTNAME_Final.docx(-5 points if not named with this format)

For example, my submission for the first draft would be Lutz_Draft1.docx

No late submissions will be accepted for any portion of this project. No late submission for the final version can be accept due to deadlines for

course grade submission. Please plan accordingly.

Case Questions

Calculate measures of forecast accuracy for FY 2015 and FY2016 using the MFE, MAD and MAPE. Do these forecasts seem adequate for the

purposes of decision making? Why or why not?
Develop a forecast for FY 2017using 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. Use ONE of the forecast values to support your

recommended decisions in Question 5 below.
Calculate what appropriate values of EOQ and ROP would have been for FY2016 based on the FY2016 forecast value. Give your final answer in

full sock sets (round to the appropriate whole number.) Then, calculate what appropriate values for EOQ and ROP would have been for FY2016 based on

actual demand. Based on this difference, indicate what the implications are for inventory management costs in FY2016. See additional tips below:
Compare the costs for decisions based on the forecast to the actual data
Use a service level of 95% (z=1.65) when calculating the ROP
Calculate average weekly demand (d ̅) by dividing the forecast by 50 weeks
For the variance in weekly demand, use the data provided in the table with the FY2015 forecast for all approaches
Annual Inventory management costs will include the following: Annual Holding Costs, Annual Ordering Costs, and Purchase Cost.
Calculate inventory management costs for the company’s current decisions about EOQ and ROP based upon actual demand in FY2016. Compare

these to the costs to that would have been achieved if the company had used its forecast for FY2016 to calculate more appropriate EOQ and ROP values

(what you calculated in Question 3).
Provide the company with the following recommendations for FY 2017 to improve SCM performance, based on analysis of available data and

appropriate methods from SCM 301. Be sure to justify your recommendation. Use your forecast values from Question 2as input into your decisions.
Indicate which of the three suppliers should be used for FY2017. It will be helpful to develop a supplier scorecard (NOTE: Use scores of

3=best, 2=second best, 1=worst);
Indicate what appropriate values for EOQ and ROP would be for FY2017 based on your forecast from Question 2 and recommended supplier from

Question 5a. Give your final answer in full sock sets (round to the appropriate whole number). What are the expected costs for inventory

management based on your decisions, and how do these compare to the performance observed in FY2016 based on the company’s decisions for that year

(Question 4 numbers based upon the order quantity of 4000)?
Indicate which transportation mode should be used for FY2017. You may use a scorecard, but you must also include an analysis of the

transportation costs associated with each option and discuss other implications (such as inventory levels, safety stock, etc);
Indicate an appropriate location for a new facility if one is to be built. Round your final coordinates (X, Y) to two decimal places. Use

methods discussed in the course,but be sure to include discussion of other relevant factors that would influence the choice of a specific location.
Discuss potential issues with the implementation of your recommendations. What changes or resources would be necessary to implement them,

and what might create challenges?

Final Project Assignment
SCM 301 Fall 2017
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 consultant assigned to develop a supply chain management strategy for the companyThrox. You are tasked with evaluating the

company’s recent performance and recommending changes (decisions) to improve supply chain management performance. You should use concepts and

methods discussed in SCM 301 to undertake these two tasks.

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, CAfrom 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 $15/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 2 weeks. So, the total lead time is considered to be 6 weeks from when Throxplaces an order til it reaches the

Richmond facility. Historically, the standard deviation of lead time has been 1 week.

Product Orders(Demand) Information

The company provides you with the following information for the past two fiscal years:

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 2015 and FY 2016:

Weighted Moving Average uses Wt = 0.8 and Wt-1=0.2.
Exponential Smoothing uses α = 0.9.

Inventory Management Information

The initial inventory for all sock styles combined at the beginning of FY 2017is 3,500 units.You also have information on current costs, which


• Order cost to Throxfor an order placed with its current supplier, $/order = S = $400
• Holding cost per set per per year = H = $6
• The company currently pays $5 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 1,450 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:

To keep their order management simple, Throx wants to use a single-sourcing strategy, so they want a recommendation about which supplier would be


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:

* 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.