Phase 3 Structured Problem Solving ProcessStep 1: Define the Problem 1. Develop/Implement Cycle Inventory 2. Develop software automation a. Demand Forecasting b. Cycle Inventory c. Simulation 3. Create Benchmark of SCM a. PlantronicsStep 2: Create a Plan 1. Develop/Implement Cycle Inventory a. Reasons for Cycle Inventory b. Context of SC Network and SC Stages c. Best forecasted demand d. Calculate Cycle Inventory and other values (Enter Formulas for each into Spreadsheet) e. Graphically show Theia’s Cycle Inventory 2. Develop Software Automation a. Automate Demand Forecasting in Visual Basic b. Automate Cycle Inventory in Visual Basic c. Show simulation of Software Module of Theia Vision’s Cycle Inventory/Demand Forecasting 3. Develop a Benchmark of SCM against PlantronicsStep 3: Execute the Plan Following contents are the plan in execution.[1] - Cycle Inventory Advantages/Reasons for Theia Having a Cycle Inventory · Average amount inventory used to satisfy demand between shipments → allows Theia to take advantage of economies of scale · Allows Theia to minimize total inventory costs · Theia should keep the cycle inventory as low as possible to save money on shipping and storage of inventory costs. → key aspect to maximize profit · Facilitates the balance of supply and demand for Theia’s products by allowing SPC to satisfy customer demand based on forecasts · Implementing optimal quantity of inventory to receive from suppliers per each shipment/order allows Theia to minimize holding cost of inventory and transportation cost · Overall, having a cycle inventory will allow SPC to reduce costs, therefore maximizing their profits Context of Theia’s Supply Chain Theia’s Supply Chain Network Theia Vision’s Best Forecasted Demand for Year 4 (Winter’s Method) Year Annual Demand Period Forecast 1 578,166 1 15099 2 96110 3 182443 4 284514 2 1,492,695 5 219828 6 330269 7 416538 8 526060 3 2,365,871 9 359812 10 535437 11 659850 12 810772 4 2,504,131 13 499278 14 616411 15 662682 16 725260 Cycle inventory is the average inventory needed to meet customer demand between the order time and when the supply arrives. Costs are part of the equation due to inventory storage expenses. ⇒ Therefore, we need to know the annual demand of our product as well as the material cost, shipping cost, and holding cost: Demand (D) = Annual demand (obtained through forecasting) Year 4 2,504,131 Smart Glasses Cost (C) = Price paid by the manufacturer to the supplier for 1 unit of supply $300 Inventory holding cost (h%) = cost of holding $1 of inventory for 1 year. 0.1 Fixed Ordering Cost (S) = cost of placing the order and labor for receiving. $3000 Lot Size (Q) = Number of units in 1 lot of shipment (quantity per shipment) QL*= √ QL* = √ QL* =12920.6 The amount Theia should load onto each truck is about 12,920.6 Smart Glasses per shipment to minimize total cost based on forecasted demand for year 4. (Efficiency) Cycle Inventory QL*.

1. Phase 3 Structured Problem Solving ProcessStep 1: Define the
Problem
1. Develop/Implement Cycle Inventory
2. Develop software automation
a. Demand Forecasting
b. Cycle Inventory
c. Simulation
3. Create Benchmark of SCM
a. PlantronicsStep 2: Create a Plan
1. Develop/Implement Cycle Inventory
a. Reasons for Cycle Inventory
b. Context of SC Network and SC Stages
c. Best forecasted demand

2. d. Calculate Cycle Inventory and other values (Enter Formulas
for each into Spreadsheet)
e. Graphically show Theia’s Cycle Inventory
2. Develop Software Automation
a. Automate Demand Forecasting in Visual Basic
b. Automate Cycle Inventory in Visual Basic
c. Show simulation of Software Module of Theia Vision’s Cycle
Inventory/Demand Forecasting
3. Develop a Benchmark of SCM against PlantronicsStep 3:
Execute the Plan
Following contents are the plan in execution.[1] - Cycle
Inventory
Advantages/Reasons for Theia Having a Cycle Inventory
· Average amount inventory used to satisfy demand between
shipments → allows Theia to take advantage of economies of
scale
· Allows Theia to minimize total inventory costs
· Theia should keep the cycle inventory as low as possible to
save money on shipping and storage of inventory costs. → key
aspect to maximize profit
· Facilitates the balance of supply and demand for Theia’s
products by allowing SPC to satisfy customer demand based on
forecasts
· Implementing optimal quantity of inventory to receive from
suppliers per each shipment/order allows Theia to minimize
holding cost of inventory and transportation cost
· Overall, having a cycle inventory will allow SPC to reduce
costs, therefore maximizing their profits
Context of Theia’s Supply Chain

3. Theia’s Supply Chain Network
Theia Vision’s Best Forecasted Demand for Year 4 (Winter’s
Method)
Year
Annual Demand
Period
Forecast
1
578,166
1
15099
2
96110
3
182443
4
284514
2
1,492,695
5
219828

4. 6
330269
7
416538
8
526060
3
2,365,871
9
359812
10
535437
11
659850
12
810772
4
2,504,131
13
499278
14
616411

5. 15
662682
16
725260
Cycle inventory is the average inventory needed to meet
customer demand between the order time and when the supply
arrives.
Costs are part of the equation due to inventory storage
expenses.
⇒ Therefore, we need to know the annual demand of our
product as well as the material cost, shipping cost, and holding
cost:
Demand (D) = Annual demand (obtained through forecasting)
Year 4
2,504,131 Smart Glasses
Cost (C) = Price paid by the manufacturer to the supplier for 1
unit of supply
$300
Inventory holding cost (h%) = cost of holding $1 of inventory
for 1 year.
0.1
Fixed Ordering Cost (S) = cost of placing the order and labor
for receiving.
$3000
Lot Size (Q) = Number of units in 1 lot of shipment (quantity
per shipment)
QL*= √
QL* = √
QL* =12920.6
The amount Theia should load onto each truck is about 12,920.6
Smart Glasses per shipment to minimize total cost based on
forecasted demand for year 4. (Efficiency)

6. Cycle Inventory
QL* = QL*/2
QL* = 12920.6/2
QL* = 6,460.3
The cycle inventory is about 6,460.3 smart glasses at Theia
based on annual forecasted demand for year 4.
Explanation ⇒
· Annual Demand obtained from forecasting ⇒ 2,504,131 Smart
Glasses
· The Unit production cost in financial modeling was based on
Google Glasses prices, and other competitors. Our product is
projected to be sold for $300 based on the competitors costs and
the components pricing.
· Various other products were evaluated to come to the
conclusion of 10% holding cost. Our product is sold for $300
per unit and costs $30 per unit to hold. (30/300=.10
· Based on trucks shipment costs in general and for other small
electronic accessories, it was concluded that the ordering cost
would be $3000 per trip.

7. Formulas from textbook/lecture placed into spreadsheet to
calculate values below
Theia Vision: Cycle Inventory
Year
Period
Demand
Annual Demand
Unit Cost
Holding Cost(%)
Shipment Cost
Optimal Lot Size
Number of Shipments
Cycle Inventory
Cycle Inventory Holding Cost
Replenishment Cycle Time
Annual Ordering Cost
Material Cost
Annual Total Cost
1
1
15099
578,166.00
$300.00
10.00%
$3,000.00
1738
8.7
869
$26,066.36
10.358179
$295,590.32

8. $57,816,600.00
$58,112,190.32
2
96110
$300.00
10.00%
$3,000.00
4384
21.9
2192
$65,764.35
4.105568
3
182443
$300.00
10.00%
$3,000.00
6041
30.2
3020
$90,608.69
2.979847
4
284514

9. $300.00
10.00%
$3,000.00
7543
37.7
3772
$113,150.92
2.386194
2
5
219828
1,492,695.00
$300.00
10.00%
$3,000.00
6631
33.2
3315
$99,459.84
2.714663
$512,138.92
$149,269,500.00
$149,781,638.92
6
330269
$300.00
10.00%
$3,000.00
8127
40.6
4064

10. $121,910.23
2.214744
7
416538
$300.00
10.00%
$3,000.00
9127
45.6
4564
$136,909.50
1.972106
8
526060
$300.00
10.00%
$3,000.00
10257
51.3
5129
$153,859.35
1.754849
3

11. 9
359812
2,365,871.00
$300.00
10.00%
$3,000.00
8483
42.4
4242
$127,245.98
2.121874
$645,797.63
$236,587,100.00
$237,232,897.63
10
535437
$300.00
10.00%
$3,000.00
10348
51.7
5174
$155,224.56
1.739415
11
659850
$300.00
10.00%
$3,000.00

12. 11488
57.4
5744
$172,317.29
1.566877
12
810772
$300.00
10.00%
$3,000.00
12734
63.7
6367
$191,009.79
1.413540
4
13
499278
2,503,631.00
$300.00
10.00%
$3,000.00
9993
50.0
4996
$149,891.66
1.801301
$669,783.42

13. $250,363,100.00
$251,032,883.42
14
616411
$300.00
10.00%
$3,000.00
11103
55.5
5552
$166,548.78
1.621147
15
662682
$300.00
10.00%
$3,000.00
11512
57.6
5756
$172,686.68
1.563525
16
725260

14. $300.00
10.00%
$3,000.00
12044
60.2
6022
$180,656.30
1.494551
CSE 171B Cycle Inventory Spreadsheet
· Each time the inventory reaches ROP, ideally there will be a
new shipment of Theia’s Smart Glasses ordered.
· Inventory needs to be replenished approximately every ~1.5
days for Theia’s smart glasses based on forecasted demand in a
year 4.
· The average inventory (cycle inventory) is (rounded)
approximately 6460.3 units of Smart Glasses in year 4 based on
forecasted demand.
· To satisfy annual demand in year 4 of smart glasses Theia
needs about (rounded) 193.81 orders or shipments per year.
Conclusion:
· From our demand forecasting results, the annual demand for
year 4 is estimated to be 2,503,631.0 units.
· We should have 193.81 shipments per year with a cycle
inventory of 12920.6 units (Year 4)
· Costs totaling around $251,032,883.42 (Year 4)
[2] - Software Automation - Demand Forecasting - Product
Cycle Inventory Model - Simulation
1. User enters demand for product

15. 2. User clicks buttons “Choose Module”
3. User selects either demand forecasting or inventory
a. If User Selects Demand Forecasting
i. If user selects:
1. Static Forecasting
2. Moving Average (4 Point, 4 Periods into future)
3. Simple Exponential Smoothing
4. Holt’s Method(Not completed)
5. Winter’s Method (Not Completed)
b. If User Selects Inventory (Not completed)
[3] - Benchmarking
Calibrating/Comparing/Contrasting of Theia’s SCM approach
and implementation against Plantronics
Competitive Strategy Comparison (Theia VS. Plantronics)
Context:
Source of Competitive Advantage
Low Cost
Differentiation
Strategic Target
Broad
Cost Leadership
Differentiation (Theia)
Narrow
Focused

16. Theia’s Competitive Strategy
· Theia Vision has a broad audience of consumers that are
primarily focused towards technology savvy individuals and
those with visual/hearing impairments.
· Customers can purchase Theia Vision from common retailers
(Amazon, Walmart, Bestbuy, Target, etc.) and, of course, from
our website.
· At Theia our business process is focused towards innovation
and marketing of our products and features. With customer
satisfaction in mind, we are able to offer features that our
competitors can’t.
· Key business partners include battery suppliers, parts
wholesalers, and logistics companies
Force
Strength
Explanation
Competitors
HIGH
Intra-Industry Competition Level is High: Companies are
working hard to capitalize on this rapidly growing market. So
far, Vuzix’s AR Glasses are considered the top performing AR
Glasses. However, their pricing is very steep so we will see how
they hold up when the New Entrants come in.
New Entrants
HIGH
Threat Level for New Entrants is High: The barrier to entry is
extremely low as we see big companies such as Amazon,
Facebook, Microsoft, and most alarmingly, Apple trying to
enter this market. Apple and Microsoft are currently in its
production stage for AR Glasses with Microsoft’s HoloLens
already available for preorder.
Suppliers
MED
Suppliers have Medium Power: as there are only a few
businesses in the world that specialize in lens crafting and
frame crafting. Luxottica makes glasses frames for virtually,

17. most of the frame industry so if we were to use them as our
supplier, it would be hard to be in control of the pricing as they
are a monopoly within their industry.
Buyers
Low
Consumer Power is Very Low: Since There is insubstantial
price differentiation between products, the bargaining power of
consumers is low.
There are no low-cost providers within this industry and it is
unknown if this can even be a possibility at this time, given the
technology needed for AR Glasses and our modern environment.
Complementors
LOW
Potential Complements Include: services/features such as the
Amazon Alexa, Weather Channel App, and Google/Google
Maps. These are three add-ons that could prove to be quite
useful in conjunction with AR Glasses.
Substitutes
LOW
Few substitutes including, other smart accessories, (apple
watch, etc.)
Force
Strength
Explanation
Competitors
High
Competitors are well established, large players. Consumers trust
and go to them for headsets. Large number of competitors
New Entrants
LOW-MED
Few barriers to entry, cost of production is relatively low
Suppliers

18. LOW
Component suppliers are abundant, and global
Buyers
High
Consumers can easily purchase a new product and move on.
Complementors
LOW
Few complementors to headphone (maybe laptop and phone
discount deal)
Substitutes
LOW
Few substitutes in headset industry
Source of Competitive Advantage
Low Cost
Differentiation
Strategic Target
Broad
Cost Leadership
Differentiated
Narrow
Focused Plantronics
Plantronics Competitive Strategy
· Focused Strategy
· Headsets are focused toward consumers using gaming
consoles, phones, and computers
· Plantronics product will satisfy customer needs in these areas
· Consumers (entertainment)
· Business sector(sales focus on IT departments, help desk etc.)
· High quality assurance
· Large cost savings on equipment/service fees (Unified

19. Communications)
· Improved collaboration decreases wasted resources/time to
maximize efficiency/profits
· Innovative products that perform well
· R&D into new product platforms in their focus area
Responsiveness/Efficiency Spectrum
Highly Efficient SC
Somewhat Efficient SC
Somewhat Responsive SC
Highly Responsive SC
Plantronics
Theia
In terms of where Theia lies in the Responsiveness/Efficiency
Spectrum, we would like to be a company with a highly
responsive supply chain. Since a portion of our business
involves custom glasses for those with visual impairments, it is
necessary for us to be able to build a pair of glasses tailored to
individuals as well. Our customers shouldn’t have to wait for
weeks just to receive a product they ordered online, so to
provide the best experience from end to end, we will develop
our supply chain to be highly responsive. In comparison,
competitors like Vuzix and Google Glass lie more to the left of
the spectrum, where Google Glass is somewhat responsive and
builds enterprise level glasses for businesses. Vuzix is yet
further down, and instead opts for a somewhat efficient supply
chain, since their glasses are more for the general consumer
“one type fits all” style.
Plantronics requires a somewhat Responsive SC, in order to
address customers because their products are innovative.
Implied Demand Uncertainty
Low Uncertainty
Somewhat Low Uncertainty
Somewhat High Uncertainty

20. High Uncertainty
Plantronics
Theia
· High Uncertainty
· Theia Vision is a ground breaking, innovative product
(Differentiated product strategy)
· Market may not initially accept the product (High Uncertainty)
· Somewhat High Uncertainty
· Plantronics implements new product lines that are innovative
· Customer trust in their new lines may cause some
uncertaintyTheia/Plantronics Supply Chain Strategy
Our product will have a highly responsive SC overall. Meaning
that our SC can respond quickly to customer demands with our
multiple product lines, large quantities being shipped, short lead
times, and high quality of service. Using the Responsiveness vs
IDU spectrum allows us to understand our strategic fit and
expand the zone to match company goals.
Plantronics fits in at a similar position as Theia, because they
have somewhat high responsiveness and somewhat high
uncertainty. Both Theia Vision and Plantronics Headsets are
innovative and require responsiveness in the Supply Chain.
Conclusions/Comparisons Between Theia and Plantronics SCM
Plantronics’ Global SCM
Theia’s SCM
· Pull Model (Integrated Networks)
· Demand Driven
· Global inventory visibility (accurate)
· Correct PO Prices, receives acknowledgements and commits
from suppliers
· Virtual Supply Chain
· Higher accuracy shipping dates/time to customers at order

21. entry
· Faster, more effective, sales, and operations planning process
· Decision Based
· ‘Lean” Practices
· Automate Manual Transactions
· Somewhat high uncertainty
· Somewhat high responsiveness
· High Uncertainty
· Theia Vision is a ground breaking, innovative product
(Differentiated product strategy)
· Market may not initially accept the product (High Uncertainty)
· Highly responsive supply chain.
· Since a portion of our business involves custom glasses it is
necessary for us to be able to build a pair of glasses tailored to
individuals as well.
· customers shouldn’t have to wait for weeks just to receive a
product they ordered online,
· Rapid, effective sales/operations
· Tracking of product/materials (increase in responsiveness
· Demand Driven → inventory based on demand forecasts
Step 4: Check
The frameworks used are provided in the textbook and in
lecture, therefore the information above is correct. The
forecasted demand is checked based on calculations by hand and
carefully checking the spreadsheet. Our benchmarking
comparison takes into account both companies competitive
strategies and aligned SC strategy. We provided as much
context as possible to complete the assignment. Our software
automation modules automates demand forecasting using the
moving average method Step 5: Learn & Generalize
Based upon research conducted on Plantronic’s supply chain,
we can create an effective supply chain for Theia. Plantronics
fits in at a similar position as Theia, because they have

22. somewhat high responsiveness and somewhat high uncertainty.
We decided to create a highly responsive SC overall. Meaning
that our SC can respond quickly to customer demands with our
multiple product lines. Our cycle inventory above takes into
account previous phases financial model and demand
forecasting. After completing cycle inventory
ITS 835
Chapter 5
ERM in Practice at the University of California Health
System
Enterprise Risk Management
Professor Michael Solomon
Introduction
• University of California’s ERM
• Technology
• Premium rebate program
• Professional Liability Prescription Program (PLPP)
• ERM and the Center for Health Quality and Innovation
• Protected health information value estimator
• PHIve

23. University of California’s ERM
• University of California (UC) Health System
• Clinics, medical centers, schools
• Over 3 million patient visits annually
• UC Office of the President’s Office of Risk Services
• Responsible for ERM
• UC formally adopted COSO Integrated Framework in 1995
• Committee of Sponsoring Organizations Internal Control
• Newly hired Chief Risk Officer (CRO)
• Experienced in ERM from industry
• Key Performance Indicator (KPI)
• Critical to ERM foundation
Technology
• UC’s approach incorporates technology
• ERM information system (ERMIS)
• Initial phases
• Simple risk assessment tools
• Dashboards
• Control, mitigation, monitoring, survey
• Dashboard system
• Based on KPIs

24. • Visual indicators
ERM Process
ERMIS Dashboards
UC MMR (My Managed Risk) Portal
UC’s Approach to Evaluating Incidents,
Events, and Claims
Premium Rebate Program
• Program to reduce frequency and severity of loss
• Professional Liability Prescription Program (PLPP)
• Encourage risk reduction initiatives
• Aimed at reducing cost of risk
• Rewards units for implementing effective initiatives
• Annual rebates for initiatives that work
• Driving concept - Everyone is a risk manager
• ERM and the Center for Health Quality and Innovation
• Joint venture to award up to $8 million
• Reduce risk of clinical harm to UC surgery patients

25. PHIve
• Personal health information (PHI)
• UC asked Bickmore to develop a software tool
• Estimates the value of PHI
• PHI value estimator (PHIve)
• PHIve steps
• Process determines the impact of PHI breach
• Repercussions
• Reputational
• Financial
• Legal and regulatory
• Operational
• Clinical
Summary
• Risk is a part of all organizations
• ERM assists organizations in managing all risk
• UC deliberately advanced ERM to reduce overall risk
• UC Office of Risk management updates risk plans in an
ongoing effort
• Technology is a cornerstone of UC’s ERM

26. ITS 835
Chapter 3
ERM at Mars, Incorporated: ERM for Strategy and
Operations
Enterprise Risk Management
Professor Michael Solomon
Introduction
• Mars’ ERM history
• Phase 1 – Crash and Burn
• Phase 2 - Success
• Global rollout
• Reporting
• Operating workshops
• Technology
• Aggregation
• Template evolution
• Conclusion
Mars’ ERM History
• Mars, Incorporated
• Privately held -> migration to non-family management

27. • Decentralized management
• Leadership had legacy commitment to risk management
• ERM was viewed as an evolution
• COSO versus bespoke approach
• COSO – Committee of Sponsoring Organizations structure
• Bespoke approach won
• Phase 1
• Failed due to being impractical and overly complex
• Phase 2
• Simpler and targeted
Planning Workshops
• Desire to align senior management goals with ERM
• Started with simple template
• Operating plan initiative sheet
• Objective
• Score
• Risk column
• Risk treatment column
• Management team met to define and rank
• Risks
• Risk treatments
• Changed label from “mitigations”

28. Global Rollout
• Used lessons learned from pilot
• Each unit has specific nuances
• Interviewing GM and CFO together saved subsequent
interview time
• Workshops helped to identify
• Gaps in risk management readiness
• High-risk initiatives
• Ongoing activities with unexpected high risk
Reporting
• Color-coding adds
• Urgency
• Clarity
• Groups are defined
• Clusters
• Score represents
• Confidence of meeting
goals
Reporting, cont’d.

29. Reporting, cont’d.
Reporting, cont’d.
Operating Workshops
• Several ongoing changes
• Technology
• Early-on, process was technology agnostic
• Word -> Excel
• Excel -> purpose-built software
• ERM supports aggregation
• More complete view of organizational impact of risk
• Continual template evolution
• Added risk treatment owners and due dates
Summary
• Mars received an award for their ERM
• Corporate Executive Boards’ “Force of Ideas Award” for ERM
• Key factors for ERM success
• Alignment with Mars’ principles

30. • Focus on meeting objectives
• Operational
• Strategic
• Flexible
• Realistic
TIM 125
Phase 4
Drone4Life
Professor Subhas Desa
Group 26
Chelsie Baker
Janne Chua
Ke Xu
Tieshan Zeng
Kelly Zheng

31. 1.safety inventory
2.design facility network
3.design transportation network
4.safety inventory module
5.transportation module
6.facility module
7.user manual
8. Executive summary
1. Define:
· SP1:Make sure that you complete all the tasks that we agreed
upon during our Phases 2, project meetings. “Benchmark”
(calibrate/compare/contrast) your SCM approach and
implementation against Plantronics (see Problem 6 in HW #5).
· SP2:Complete your implementation of cycle and safety
inventory for your SC network.
· SP3:Two important new SCM drivers that you should now
work on, while we are covering the material in class, are
Facilities and Transportation Network (see “Readings” above).
· SP4: Work on implementing the software (Information)
automation for your project using Excel and Visual Basic. For
example, create and link demand forecasting module, product
cycle and safety inventory modules, transportation module and
facilities module.
· SP5: Attempt to simulate your product’s supply chain and
examine various scenarios using your integrated software.

32. · SP6: Align and integrate your high-level strategies (from
Phases 1, 2) with the detailed implementations of each driver.
· SP7: Develop the proper SC management guidelines for your
team’s product, as well as a simple user’s manual for your
software module.
2. Plan
· What information is available for solving the problem?
· For SP1-SP7, we have:
· Lecture Notes of SCM
· Online resources
· Notes of Cycle Inventory
· Notes of Safety Inventory
· Software Integration
· SCM drivers
· What assumption need to be made to make the solution
process manageable?
· We have business analysts and data analysts to analyze the
problems
· Audience: the CEO, CTO and Dev, team.
· What analysis needs to be performed to resolve the issues
defined in Step 1?
· SP1: Complete the benchmark work, comparison with
Plantronics
· SP2: Indicate the cycle inventory and safety inventory
· SP3: Facility and Transportation network
· SP4-5: Software Integration and do a lot of scenarios(calculate
the value by using the software)
· SP6: Align and integrate the high level strategies
· SP7: do the SCM guidelines for our products
· How can you provide the information?
· Bullet points

33. · Description
· Excel tables
· Visual Basic
· Calculations
From TA:
One supplier
Transportation
Inventory
Facilities
Cycle calculations
Dont calculate all suppliers, select one
Select one location
Cycle Inventory and Safety Inventory
1. Define:
· Indicate the cycle inventory and safety inventory
2. Plan
·
3. Execute
SP2: Complete your implementation of cycle and safety

34. inventory for your SC network.
Cycle Inventory for Motor:
Use the list of equation to find our cycle inventory amount:
Annual Ordering Cost = (D/Q)*S
Annual Holding Cost = (Q/2) * hC
Optimized lot size = Q* = sqrt(2DS/hC)
Number of annual orders = D/Q
Total annual Cost = Annual Order Cost + Annual Holding Cost
a. Find EOQ(optimal lot size)
b. Find number of shipments/year(optimal order frequency)
c. Cycle inventory
d. Cycle inventory holding cost/Annual holding cost
e. Find replenishment cycle time (order frequency)
f. Annual Ordering Cost
Annual Demand(D) = 18852
Per Unit Cost(C) = $5000
Holding Cost(hC) = 10% = $500
Shipping Cost/Setup Cost/Cost per order (S) = $200
a. Find EOQ(optimal lot size)
EOQ = QL* = = = 122.807
b. Find number of shipments/year(optimal order frequency)
D/QL* = 18852/122.807 = 153.508 ≈ 153.5 shipments/year
c. Cycle inventory
QL*/2 = 122.807 /2 = 61.403 ≈ 61.4 units
d. Cycle inventory holding cost/Annual holding cost
Cycle inventory * hC = 61.4 * 500 = $30701.79
e. Find replenishment cycle time (order frequency)
T = 365/n = 365/61.4 ≈ 2.38 days
f. Annual Ordering Cost
(D/Q) * S = 153.5 * 200 = $30701.79
g. Total Annual Cost:
Total annual Cost = Annual Order Cost + Annual Holding Cost
= $30701.79 + $30701.79 = $61403.58

35. Safety Inventory:
Annual demand (Forecasted) = 18852
Average Weekly Demand = 18852/52 = 362.5
Desired CSL (%) = 95
Lead time (weekly) = 0.34 week
SS = 1.64 * sqrt(0.34) *362.5 =346.65
ROP = DL + SS = 362.5*0.34 + 346.65 = 469.9
SS=346.65
Q
(Items)
T (Time)
(Weeks)
Safety Inventory Model
Lead time = 0.3 weeks
Lot Size: 122.807
ROP=469.9
Demand:
362.5
Because all of our parts are only required one for each products,
so the safety inventory of all the parts are the same.

36. SP2: Facility Network
Define:
· Define the problem: after doing the cycle and safety inventory,
two important new elements (SCM drivers) of your project are
designing/implementing a Facilities Network
Plan:
· Process to design the facility network
Execute:
Each target city are close to the main army base in each state.
Step 1: distance between warehouse and demanded army base
Target state
Richmond
Los angeles
San Antonio
Columbus
Phoenix
Richmond,VA
0
2234
1263
701
1829
San jose
2873

37. 339.8
1692.4
2479.3
710.8
Austin
1471
1378
79.5
1235.2
1005.9
Atlanta
532.5
2183
988
567
1845
San diego
2634.2
120.6
1275.7
2227.2
354
Step 2: The transportation cost = $1.69* miles
Step 3: Forecasted demand in each region for
Step 4: The Excel sheet for Facility design
Conclusion：
As shown, the best option is to open the plants in Richmond,

38. Austin and San Diego with lowest cost of $23489.7.
Transportation Network:
Define : Implement process and design for transportation
network
Plan: the process for transportation network design
Execute:
Step1: Which mode of transportation should be used ?
Total cost =Transportation cost + inventory holding cost
Inventory cost = cycle inventory cost + safety inventory costs +
in-transit cost
Conclusion: The mode of transportation we should use is the
Truck because the Truck has the lowest cost than other modes
of transportation
Step 2 and Step 3: Should inventory be aggregated spatially?
Should orders be aggregated in time ?
It should be spatially aggregated because it will minimize the
total cost and we made a Excel sheet to analyze three different
scenarios
Conclusion: based on the three scenarios, we should choose the
truck as transportation mode and make the number of stocking
location as small as possible, because it will save a lot of safety
inventory cost. The scenario 3 of truck mode is the best option
Step 3: Rank of transportation modes and conclusion:

39. User Manual
Sheet1:
Choose a Module Window:
· Demand Forecasting Button: Click to select Forecasting
method to perform
· Inventory Button: Click to perform Inventory management
computations
· Transportation Button: Click to perform Transportation
management
· Facilities Button: Click to perform Facility management
Demand Forecasting Module:
· Static Forecasting Button: Click to perform Static Forecasting
· Moving Average Button: Click to perform Moving Average
Forecasting method
· Simple Exponential Smoothing Button: Click to perform
Simple Exponential Smoothing forecasting method
· Holt’s Method Button: Click to perform Holt’s method of
forecasting
· Winter’s Method Button: Click to perform Winter’s method of
forecasting
Static, Moving Average, Simple Exponential Smoothing, Holt’s,
and Winter’s Forecasting Modules:
· Enter the demand data in spreadsheet Sheet1 from A2 to A21
· Click the specific Forecast method button to run the forecast
· Back button: Click to finish and get back to sheet1

40. Inventory Module:
· Enter values required in the textbox then click the “Calculate
the cycle inventory” or “Calculate the safety inventory” Button
to calculate the accordinate inventory values and create a
metrics in spreadsheet
· MessageBox pops out “ The values are compute to the
spreadsheet”
· Close Button: Click to exit
Facilities Worksheet:
· Solver Button: Click to calculate optimization of facilities