2.
1
Table Of Contents
I. Executive Summary ……………………………………………………………….……...2
II. Supply Chain Network ……………………………………………………………….…3
III. Competitive Strategy ……………………………………………………...…….…….4
IV. Supply Chain Strategy ………………………………………………………….……..4
V. Supply Chain Drivers ……………………………………………………………….…6
VI. Product Lifecycle Model ……………………………………………………………..9
VII. Market Analysis ……………………………………………………………….………...11
VIII. Demand Forecasting ……………………………………………………………….……12
IX. Cycle Inventory ……………………………………………………………….………...13
X. Safety Inventory ……………………………………………………………….……….14
XI. Facilities……………………………………………………………….………………...16
A. Capacitated Plant Model
XII. Transportation …………………………………………………………...….…………..17
XIII. SCM Software ……………………………………………………...……….….…………..18
A. Screenshots of each tab
B. User manual
C. Different scenarios
XIV. Conclusions and Lessons Learned ………………………………………………..25
XV. Group Member Reflections …………………………………………………….……..26
XVI. Final Project Outline ………………………………………………………………..31
XVII. Appendix (Phases 14) ..................................................................................................32
14.
13
IX. Cycle Inventory
Year 1
Sleeve
Demand : 300,000
Shipping Cost : $400
Holding Cost : .2
Cost per Unit : $3
Annual Cycle Inventory for Sleeves : 10,000
Screen
Demand : 300,000
Shipping Cost : $400
Holding Cost : .2
Cost per Unit : $15
Annual Cycle Inventory for Screens : 4,500
Processor
Demand : 300,000
Shipping Cost : $400
Holding Cost : .2
Cost per Unit : $275
Annual Cycle Inventory for Processors : 1,000
Battery
Demand : 300,000
Shipping Cost : $400
Holding Cost : .2
Cost per Unit : $10
Annual Cycle Inventory for Batteries : 5,500
Explanation: We obtained the demand for the first year from our demand forecast which was
300,000 units. The shipping cost was obtained from doing research about how much it would
cost suppliers to ship wearable technology. We assumed the holding cost was 20% so the value
for h = 0.2. The cost per unit was obtained from doing research online for the price of obtaining
each material.
15.
14
X. Safety Inventory
Terminology
Optimal Lot Size: (QL)i
*
= sqrt ((DiSi 2) / (hiCi))
Cycle Inventory: (QL)i
*
/ 2
DW = expected weekly demand
QL = lot size
T = replenishment time
L = supplier lead time
ROP = (DL)M ss = reorder point
(DL)M = LDW = expected demand during time period
ss = ROP (DL)M = safety stock/inventory
Sleeve
DW = 5,769.23 → 5,770 units
QL = 20,000 units
T = 24.33 → 25 days
L = 2 weeks
ROP = 12,148 units
(DL)M = 11,540 units
ss = 607.14 → 608 units
DW was found as the quotient of the annual demand and the number of weeks in a year;
so 300,000 divided by 52 came out to 5,770 whole units. The lot size was found using the
formula: where D is annual demand, S is shipping cost, h is holding cost, and CL Q = √2DS/hC
is cost per unit. The replenishment time was found as the quotient of the number of days in a
year and the number of shipments in a year, which was found as the quotient between annual
demand and lot size. The supplier lead time was predicted as 2 weeks. The reorder point was
found as the sum of expanded demand during time T and the safety stock. The expanded demand
during time T was found as the product of weekly demand and the number of weeks of supplier
lead time. For the sleeve it was 5,770 units multiplied by 2 weeks to get 11,540 units. The safety
stock was found as the difference between demand during the time period TL and the stock left
from the lot size after subtracting the expected demand during time T. So we found the demand
during the time period TL to be 9,067.14 minus the difference between a lot size of 20,000 units
and an expected demand of 11,540 units, which was 8,460, and thus had 607.14 as our end
result.
16.
15
Screen
DW = 5,770 units
QL = 8,944.27 → 8,945 units
T = 10.88 → 11 days
L = 2 weeks
ROP = 11,663 units
(DL)M = 11,540 units
ss = 122.14 → 123 units
Processor
DW = 5,770 units
QL = 2,088.93 → 2,089 units
T = 2.54 → 3 days
L = 2 weeks
ROP = 11,924 units
(DL)M = 11,540 units
ss = 383.86 → 384 units
Battery
DW = 5,770 units
QL = 3,464.10 → 3,465 units
T = 4.22 → 5 days
L = 2 weeks
ROP = 12,197 units
(DL)M = 11,540 units
ss = 656.43 → 657 units
26.
25
XIV. Conclusions and Lessons Learned
With the amount of market and product research that we have done, we have been able to come
up with a clear plan for our project Forange. Our goal after these last two quarters of development is to
release a game changing device that frees up our users and does so at as low of an expense as possible.
Our supply chain strategy focuses on reducing costs, because responsiveness is less critical for the
early stages of our product life cycle, we will aim to create relationships with the supplier whom offer the
greatest discounts. We have done a considerable amount of product development and research to make
sure that the Forange will be able to meet expectations and perform as intended. We mainly focused on
other similar products such as the smartwatch, tablet, and smartphones. Since our product is a
combination of these products, we made sure to do include additions to make it more suitable for
wearable forearm technology.
Since we know the main pieces of our product are expensive we will aim to establish
welldeveloped relationships with those suppliers and secure a lower lead time as the product life cycle
ages. We aim to target the consumer, enterprise and military market segments since this is an advanced,
incognito, and wearable technology. Our product will include core technology for multiple functionalities
and entertainment, with sensitive sensors to be adaptable to the user’s movements.
The main issues with our product is maintaining a consistent aggregation from all our suppliers,
by maintaining low transportation costs we can meet our goals of increasing the demand for our product
as well as our customer use base. Once our product enters the growth stage of its life cycle we can be sure
that aggregation will be honed to perfection and from that point on the necessity is reducing costs. By
focusing on locating the lowest cost suppliers regardless of lead times we are preparing for the growth life
cycle by taking risk in the initial stage. After reviewing our project plan, our product will be very
innovative and desirable and we expect to see a high number of users so that we will be able to make a
huge change in the wearable technology industry.
Throughout this course we learned how to design a supply chain for our medium sized company.
We also learned how to do other things such as Microsoft Visual Basic and various other Excel
techniques. As a group we learned how to work around each other’s schedules and find time to be able to
work on it. Other things that we learned are more specific such as how to find where to put facilities, what
kinds of transportation we should use, and how much cycle inventory we should have.
Finally, we learned how all of these things came together in the very end through this group
project.