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are in turn stored in one gallon containers on shelving units in their warehouse. The e-cigarette devices are stored on shelves in the same warehouse. Since the products do not have an expiration date, there is no concern of spoilage on any of their items. E-juices are then dispensedinto individual containers and labeled in house for sale. After that, inventory orders are delivereddirectly to every store each week.10 | P a g e
Field ExerciseEven though I was not provided with specific numbers for the supplier ordering methods,it is easy to see how mathematical applications can be used to forecast demand with suppliers. Let’s assume that Alohma’s most popular flavor of e-juice is the classic tobacco flavor. If the production schedule for producing the e-juice formula is in house is at a rate of 16 bottles per dayat (comprised of 4 ounces per bottle of base solution plus nicotine) and let’s further assume that there are 20 production days per month for e-juices. Each bottle uses .03125 gallons of base solution (4/128 ounces per gallon). Let’s also assume the same safety stock as they are using in the inventory management of 20%, or .2. If each container is able to carry 10 gallons of base solution and the waiting time is 4 days with 3 days of processing time, how many shipments would need to be authorized for the coming month? The answer would be 4.2, and given Alohma’s tendency to stock above demand, they would likely order 5 containers in this scenario. This is solved using the following formula:16*(.03125)(4+3)(1+.2) = 16*(.03125)(7)(1.2) = 4.2 containersThis is just for one of their products, and they sell a massive variety of e-juices. So, as you can see, bulk shipments of many different flavors and constantly coming into the Alohma warehouse. Because of the long shelf life of juices, some do not require continual re-stocking as long up front shipments are sufficient for long-term use and storage. There is a constant need foradjusting the supply chain to ensure that the logistics of shipping and receiving meet the customer demand. This is another reason why the centralized location of their warehouse in Omaha is important as it encourages efficiency in the supply chain process. In terms of the supply chain, the B2B portion is by far the most important aspect. This is why Alohma chooses to deal with domestic suppliers with a higher quality control standard as opposed to some less 11 | P a g e
Field Exercisereputable foreign companies. This is important in order to maintain the quality standards and is something that is used to separate themselves from their competitors.Intermediate and Short-Term SchedulingShort term scheduling is much easier for Alohma as they use the inventory control outlined above every week and it forecasts within a one week period. Long-term scheduling is not currently used to a great extent. Tim Bowen openly admits that a more scientific approach toscheduling and inventory control will be sought out when their national footprint increases past its current point. With their current business model, long-time scheduling is simply too unpredictable.