COMPANY: ALFA MART

COMPANY BACKGROUND
DEFINE PROBLEM:
Inventory Management:
Supply Chain Optimization:
Store Operations Efficiency:
Demand Forecasting:
Quality Control:

(PDF) Classification Analysis of Product Sales Results at Alfamart Using the Naïve Bayes Method
(researchgate.net)
Marketing Plan of Alfamart ( Partial) - NATIONAL COLLEGE OF BUSINESS AND ARTS Taytay,
Rizal COLLEGE - Studocu
Alfamart’s rapid expansion never overtakes quality service | Retail Asia
(PDF) Environmental Analysis And Alfamart Business Strategy (researchgate.net)
BUS650-Term-Paper - Term paper for operations management - Name ID Ziaul Hoque Prince
1925374660 - Studocu
1. Inventory Management:
Issue: Maintaining optimal inventory levels
Solution: Predictive Analytics for Demand Forecasting
Model: Time Series Forecasting using ARIMA (AutoRegressive Integrated Moving Average) Model
Computation:
 Gather historical sales data for each product category.
 Preprocess the data (e.g., handle missing values, remove outliers).
 Split the data into training and testing sets.
 Fit an ARIMA model to the training data to forecast future demand.
 Evaluate the model's performance using metrics like Mean Absolute Error (MAE) or
Root Mean Squared Error (RMSE).
 Use the trained model to generate demand forecasts for each product category.
 Based on the forecasts, determine optimal inventory levels and reorder points for each
product.
2. Supply Chain Optimization:
Issue: Inefficient supply chain processes
Solution: Supply Chain Network Optimization Model
Model: Linear Programming (LP) Model
Computation:
 Map the entire supply chain network, including suppliers, warehouses, distribution
centers, and stores.
 Identify key decision variables (e.g., production quantities, transportation routes,
inventory levels).
 Formulate an objective function to minimize costs or maximize efficiency (e.g., minimize
total transportation costs, minimize total lead time).
 Define constraints such as capacity constraints, demand constraints, and inventory
constraints.
 Solve the LP model using optimization software to obtain optimal solutions.
 Implement the recommended changes in the supply chain network to streamline
processes and reduce costs.
3. Store Operations Efficiency:
Issue: Inefficient store operations
Solution: Automated Checkout System Implementation
Model: Queuing Theory Model
Computation:
 Collect data on average customer arrival rate, service times, and number of service points
(checkout counters).
 Use queuing theory to model the checkout process as a queuing system (e.g., M/M/1
queue for single-server systems).
 Calculate performance metrics such as average queue length, average waiting time, and
system utilization.
 Determine the optimal number of checkout counters needed to minimize customer
waiting time.
 Implement automated checkout systems (e.g., self-checkout kiosks) based on the analysis
to reduce wait times and improve efficiency.
4. Demand Forecasting:
Issue: Inaccurate demand forecasting
Solution: Collaborative Forecasting with Machine Learning Model
Model: Random Forest Regression Model
Computation:
 Gather historical sales data, demographic information, and external factors influencing
demand.
 Preprocess the data and feature engineering (e.g., encode categorical variables, scale
numerical variables).
 Split the data into training and testing sets.
 Train a Random Forest regression model using the training data to predict future demand.
 Evaluate the model's performance using metrics like Mean Absolute Percentage Error
(MAPE) or R-squared.
 Incorporate feedback from store managers, sales representatives, and suppliers into the
forecasting process.
 Generate collaborative demand forecasts using the trained model and stakeholder input.

1. Inventory Management:
Scenario: Alfa Mart wants to optimize inventory levels for a specific product category (e.g., snacks).
 Historical sales data for snacks (past 12 months):
  January: 1000 units
 February: 1200 units
 March: 900 units
 ...
 December: 1100 units
Solution in Excel:
 Use the provided historical sales data to calculate monthly demand forecasts using an
ARIMA model.
 Determine optimal reorder points based on the forecasted demand and desired service
level (e.g., 95% service level).
 Set up an Excel sheet with columns for months, historical sales data, forecasted demand,
reorder points, and actual inventory levels.
 Implement conditional formatting or alerts to notify when inventory levels fall below
reorder points.
2. Supply Chain Optimization:
Scenario: Alfa Mart aims to optimize its supply chain network to reduce transportation costs.
 Current transportation costs per unit: $2
 Number of warehouses: 3
 Number of distribution centers: 5
 Number of stores: 50
 Demand at each store: Varies
Solution in Excel:
 Create a spreadsheet with columns for transportation costs, warehouse locations,
distribution center locations, store locations, and demand at each store.
 Use Excel's Solver add-in to set up a linear programming model to minimize total
transportation costs while satisfying demand constraints and capacity constraints.
 Input constraints and objective function coefficients based on the provided data.
 Run the Solver to obtain optimal solutions for transportation routes and inventory
allocation.
3. Store Operations Efficiency:
Scenario: Alfa Mart wants to improve checkout efficiency by implementing self-checkout kiosks.
 Average customer arrival rate: 30 customers per hour
  Average service time per customer at a checkout counter: 3 minutes
 Number of existing checkout counters: 5
Solution in Excel:
 Use queuing theory formulas to calculate metrics such as average queue length, average
waiting time, and system utilization for the current setup.
 Create a spreadsheet to simulate the checkout process with and without self-checkout
kiosks.
 Compare the performance metrics between the two scenarios to determine the impact of
implementing self-checkout kiosks on efficiency.
4. Demand Forecasting:
Scenario: Alfa Mart wants to improve demand forecasting for a specific product category (e.g.,
beverages).
 Historical sales data for beverages (past 12 months): Varies
 Demographic information: Population demographics, income levels, etc.
 External factors: Seasonality, promotions, holidays, etc.
Solution in Excel:
 Use historical sales data, demographic information, and external factors to build a
predictive model (e.g., Random Forest regression) in Excel.
 Split the data into training and testing sets.
 Train the model using the training data and evaluate its performance using metrics like
MAPE or R-squared.
 Generate demand forecasts for beverages based on the trained model and input data.
5. Quality Control:
Scenario: Alfa Mart wants to implement statistical process control (SPC) to monitor product quality for a
specific product (e.g., fresh produce).
 Critical quality characteristics: Weight, freshness, absence of defects
 Historical data on quality characteristics: Varies
Solution in Excel:
 Set up control charts (e.g., X-bar and R charts) in Excel to monitor the critical quality
characteristics over time.
 Input historical data on quality characteristics and calculate control limits based on
statistical methods.
 Plot the data points on the control charts and monitor for any out-of-control points or
patterns.
  Implement corrective actions based on the analysis to maintain product quality standards.

1. Inventory Management:
Estimated Values:
 Historical sales data for Product A: 100 units/day
 Time period: Last 30 days
 Average lead time for restocking: 5 days
Solution in Excel:
 Columns A-B: Date, Sales of Product A
 Columns C-E: ARIMA Model (Forecast, Lower Bound, Upper Bound)
 Column F: Reorder Point (Forecast + Safety Stock)
Example Excel Formulas:
 Forecast: =FORECAST.ETS(A31, B2:B31, A2:A31)
 Reorder Point: =C31 + SafetyStock
2. Supply Chain Optimization:
Estimated Values:
 Number of suppliers: 3
 Transportation costs per unit: $0.50
 Demand at each store: 500 units/week
Solution in Excel:
 Define Excel worksheet with supply chain nodes and transportation costs.
 Use Solver add-in to minimize total transportation costs subject to demand constraints.
3. Store Operations Efficiency:
Estimated Values:
 Average customer arrival rate: 30 customers/hour
 Average service time per customer: 3 minutes
Solution in Excel:
 Calculate average queue length, waiting time, and system utilization using queuing
theory formulas.
  Determine optimal number of checkout counters based on analysis.
4. Demand Forecasting:
Estimated Values:
 Historical sales data for Product B: 200 units/day
 Demographic factors: Population density, income level
Solution in Excel:
 Columns A-B: Date, Sales of Product B
 Columns C-E: Random Forest Model (Predicted Demand, Actual Demand, Error)
 Incorporate stakeholder input into forecasting process.
Example Excel Formulas:
 Predicted Demand: =FOREST.PREDICT(A2, B2:B31, C2:C10)
 Error: =ABS(D2 - E2) / E2
5. Quality Control:
Estimated Values:
 Quality characteristic: Weight of Product C
 Control limits based on historical data
Solution in Excel:
 Columns A-B: Date, Weight of Product C
 Columns C-D: Control Limits (Upper, Lower)
 Columns E-F: Control Chart (Actual Weight, Control Limits)
Example Excel Formulas:
 Upper Control Limit: =AVERAGE(B2:B31) + 3 * STDEV(B2:B31)
 Lower Control Limit: =AVERAGE(B2:B31) - 3 * STDEV(B2:B31)