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Kevin Dorko
Tony Bracrella
Evan Friendenberg
Alex Ortiz
Connor Fuller

Throxxy Cleopatra (Whole Lotta Woman)

SCM 404

Executive Summary:
Given Throx Companys past data, it is easy to pin-point their strengths and weakness
within their supply chain operations. To better the companys operations, we first need to
diagnose their weaknesses. Throxs problem areas include:
Low Cycle Service Level
Low Product Fill Rate
Large Deviation of Demand
Inefficient Utilization of Transportation
All of the above problems induce an underutilization of cash flow, producing less profits for the
company due to lost sales. There are various reasons for the existence of Throxs problem
areas, but they all boil down to a couple fundamental errors that can be improved.
Inaccurate Order Quantity
Reorder Point too low
Unnecessarily High Transportation Costs
Highly Variable Lead Times
Negative Safety Inventory


Figure 1
As notable in Figure 1, Throx habitually stocked out making them unable to keep up with
demand and ultimately losing sales. This is due to their low Reorder Point (1,000) and their
inadequate Order Quantity (2,000). By Throxxy Cleopatras calculations, we conclude that Throx
Companys Reorder Point. The goal here is to help them achieve a Cycle Service Level of
around 95% which will reduce their habit of stocking out immensely. Concurrently, Throx will be
establishing some safety inventory which is something they lacked. Shown in Figure 1, Thoxs
inventory resembles a sawtooth pattern, stocking out at the trough of almost every wave, but
demand appeared to be pretty steady with the exception of two spikes in demand. This points to
the possibility that a reason for their stockouts is a forecasting one. With a better forecast for
demand, a reorder point and an order quantity can be selected to give the company enough
safety inventory to minimize the lost sales they are experiencing.
There is no cure all for Throx, however. As good as the above techniques are, the
cause of their habitual stockout tendencies could be one in the production department. A major
factor that one would need to know is Throx Companys production capacity. Another reason for
their stockouts is that they do not have the capacity to keep up with demand because they are a
relatively small company.

Low CSL and PFR

Figure 2
Product availability is one of the larger issues involved with Throx companies overall poor
performance. Around 20 weeks into the previous year, CSL dropped below 50% which is a big
factor in the the low PFR. In the beginning of the year having full inventory, they were able to
meet all of the demand, allowing PFR to remain at 100%. As the demand grew each week the
CSL began to drop as well as the PFR. This is caused due to demand during the lead time
being greater than the ROP. Most demand is being met by the inventory held but many
stockouts are occurring due to the ROP not being sufficient enough to meet the demand during
its lead time.
These issues can be fixed with a better calculation of what the best quantity should be to
order. Calculating a more efficient ROP period will allow for more demand to be met during the
lead time. Also, if possible, finding a way to decrease the lead times for the new inventory
arriving will help to increase PFR. Some of these changes must be made soon because the
forecast for the second year is not looking good. The CSL and PFR drop immediately, almost
never meeting full demand. Any of the three options listed above could be calculated and used
in hopes of bettering the companies PFR and overall performance.

Large Deviation of Demand

Figure 3
This graph shows the demand per week for Throx in 2013. As you can see Throxs
deviation of demand was very high; they have some weeks where demand is just over one
hundred and others where it is over eight hundred. They also had this same problem in 2012,
this variability caused Throx to have a very low cycle service level, low product fill rate and
several stock outs. But this creates a very interesting problem, because unlike the other key
indicators, demand is something Throx has little control over. The only options we have to
combat this issue are the suggestions we stated earlier, by changing the variables we can
control such as the order quantity and reorder point. If these options are not able to combat this
issue, possibly more collaboration with promotions would be helpful. It would be useful to know
if Throx used any special promotions during this time, that could have lead to such large swings
in the demand. If we knew this in advance it may be possible to load up inventory for these very
high demand weeks. To do this we would need more information about Throxs promotions.

Inefficient Utilization of Transportation

Figure 4
The graph above shows the costs that Throx incurred in FY 2012 and 2013. The overall
transportation costs for Throx for FY 2012 and 2013 are shown to be extremely high, mainly due
to an ineffective choice of transportation. Currently, Throx uses both intermodal and truck
transportation and evenly splits their units among the two modes of transportation. Each carrier
offers Throx volume discounts, but Throx is not taking advantage of either discount. They
currently pay the highest price for each carrier which is costing them money that they could put
in other areas of the business. Throx should have considered switching their carrier to all
intermodal transportation. This decision would most likely increase transit time but could greatly
decrease the overall cost for Throx. Also, the increase in lead time may not largely affect their
business if their customers do not require high responsiveness. This suggestion is based on
the demand and Q for this fiscal year, although the appropriate type of transportation could
change based on a higher Q and higher demand.