Download presentation
Presentation is loading. Please wait.
1
Team Name: Team 6_Tahiru Leo Fu Josh Lee John Upshaw Zach Tahiru
The Case for “W56” Team Name: Team 6_Tahiru Leo Fu Josh Lee John Upshaw Zach Tahiru Please Name this file as the team name!
2
Agenda (Leo Fu) Recommendation Problem Statement
1 Recommendation 2 Problem Statement 3 Background Information 4 Solution 5 Alternative Solution 6 Conclusion 7 Q&A 8 Appendix
3
The Team (Leo Fu) John Upshaw MBA Class of 2015 Strategy, Finance
Zach Tahiru MBA Class of 2015 Operations, Strategy Leo Fu MBA Class of 2015 Operations, Strategy Josh Lee MBA Class of 2015 Operations, Consulting
4
The Recommendation (Leo Fu)
Build a new warehouse and Remove CDC ‘W56’ in Kansas City, KS Reevaluate Inventory and Kanban levels at all facilities Discontinue CDC and Replace with ‘W56’ & W34 W87 will primarily service West Coast customers & CMSC’s W34 will primarily service East Coast Customers and CMSC’s W56 will primarily service Texas and provide support to all other locations
5
Our Objectives (Leo Fu)
Level the performance from West Coast to East Coast Reduce the reliance on premium freight Optimize West Coast CMSC’s on-hand inventory Sustain Growth of Electrical Sector
6
The Where (Josh Lee)
7
The How (John Upshaw) Levels performance from WC to EC
Reduces on hand Inventory at CSMC Reduces Premium Freight $11,382,074 vs. $8,488,349 Reduces Electric Sector priority issue
8
NPV and Sensitivity Analysis (John Upshaw)
9
Reduces frequent stock outs Reduces Inventory Costs
The How (John Upshaw) Reduces frequent stock outs Reduces Inventory Costs Utilization issues
10
Implementation Timeframe – Short-term (Zach Tahiru)
2015 Timeframe – Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Construction Warehouse Pareto Analysis of all Inventories Pareto Analysis of Sales Data. (Especially WC) Implementation of Inventory reallocation Change over CDC to W34/ Begin W56 Begin Network reconfiguration Make adjustments as necessary
11
All Thing’s Considered (Zach Tahiru)
Additional CMSC’s This method can be used to expand out West and should be your next move. In Particular, an SVC Center in the Oakland, CA area would help balance the West Coast. Would not solve the Inventory problem in the short term DBN option DBN’s were evaluated to be a short term solution This solution would likely raise average inventory at each CMSC site. Does not take care of the root of the Premium Freight problem Dramatic Redesign Potentially very costly to achieve We believe that the current network can sustain future growth
12
In Summary (Zach Tahiru)
W56 placed in St. Louis, MO Replace CDC with W34 and W56 Will reduce the average distance to warehouse from 1431 Miles to 553 Miles 10 year NPV of 21 Million Pareto Analysis to bolster forecasting accuracy of highest products by $$$ Pareto Analysis to reduce total average inventory, targeting 20% of items in the short term All items collectively will work to reduce Total Premium Freight cost
13
Questions & Answer Questions
14
Appendix- Assumptions
W56 will take 50% of W34 orders and will ship a volume equal to 50% of W87 100,000 SqFt Warehouse = 3,000,000
15
Appendix – The Other 20% As time goes on and we gather more data on West Coast Suppliers, We can begin to develop more predictable Forecasting Models.
16
Average Distance to Warehouse
The Distance between CMSC Sites (in miles) Average Distance Atlanta Baltimore Chicago Cleveland Dallas Denver Hartford Houston LA NJ Orlando Phoenix Raleigh St. Louis SF Seattle 676 717 709 781 1406 978 793 2175 831 442 1846 410 555 2472 2638 702 373 1366 1671 303 1446 2653 156 885 2284 300 828 2817 2764 345 925 1004 891 1084 2015 812 1157 1752 815 297 2131 2064 1183 1333 563 1299 2345 483 1037 2014 573 558 2460 2407 790 1664 239 1436 1522 1092 1064 1191 630 1730 2200 1880 1026 1017 1780 1844 862 1678 850 1269 1331 1743 2890 193 1187 2533 603 1077 3006 2952 1546 1602 966 1174 1202 779 1925 2440 2762 2511 2546 1825 382 1135 1040 2392 455 937 2926 2872 2135 594 992 2886 3075 2178 1475 751 1410 823 2839 2870 2054 2083 808
17
Average Distance With W56
Atlanta (ATT) 166 555 Baltimore 493 828 Chicago 734 297 Cleveland 588 558 Dallas 630 Denver (DNT) 850 Hartford 813 Houston 779 Los Angeles MCC Los Angeles P&S New Jersey (NTT) 622 937 Orlando 531 992 Phoenix 373 Raleigh 238 823 St. Louis San Francisco 382 Seattle 1135 Portland 988 659 Average =
18
Appendix – CSMC Locations
19
Appendix
20
Appendix
21
Appendix
22
Appendix Rate of Equity Rate of Debt 0.11% 1.43 5.50% Re 7.82%
Risk Free Rate 0.11% Beta 1.43 Market Risk 5.50% Re 7.82%
Similar presentations
