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Frito-Lay, Inc. and Sam’s Club: The Pick N’ Pack Aggregate

October 7th, 2009

fritolay_samsClient: Frito-Lay, Inc. and Sam’s Club
Team: Christian Edison, Ashley Mills, Stephen Rumpler
Faculty advisor:  Dr. Siems  Year: 2005
Documents: Final report (PDF)

Working with the Frito-Lay Supply Chain Department, our team has found an improved inventory process that will increase in-stock performance at Sam’s Clubs. Sam’s Club demands a 99.8% in-stock performance. Currently, Frito-Lay is not meeting this demand, therefore improvements must be made.

Analyzing Frito-Lay’s current inventory replenishment process, we discovered several problems. Some of these problems included inconsistencies in taking inventory at the clubs, negligence of inventory worksheets, and lack of communication. After further analysis, we discovered that forecasting more accurately would prevent some of these problems. There was a new challenge: finding a method of forecasting the new product line, Pick ‘N Pack. With very little historical sales, it was difficult to forecast sales.Another difficulty we encountered was that PNP sales were listed as one UPC, not by individual product. Using various data from field studies, Frito-Lay’s Order Management System, and Wal-Mart’s Retail Link, we created a forecasting model for PNP using a four week moving average which includes seasonality factors. This model predicts PNP sales for the remainder of 2005. By comparing actual PNP sales with forecasted figures in the past few months, our team’s model thus far appears to be more accurate than Frito- Lay’s current forecasting model. By implementing this new model, the inventory replenishment process will be improved, resulting in a better in-stock performance.

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