RightChain Deployment | Inventory Deployment Optimization

RightChain™ Nodes | Network Optimization Major Semiconductor Manufacturer

ERO Service Level Study Five Quarters Ending FY98

Total Transit Cost

Annual Carrying Cost

Total Annual Cost

% local source

Inventory Level White Oak RSL of $1.6M and Boston at $2.5M in '98 (after $500K ramp)

DEPOT

Service Level Statistics

Weighted Avg. Hrs. for Customers within 100 mile radius

Weighted Avg. Hrs. for Customers outside of 100 mile radius

White Oak Max. Total Hours

at 42%, includes 17% cost of capital in K $

Min. transit time in hrs.

Avg. transit time in hrs.

Max. transit time in hrs.

ERO Max. Total Hours

Transit + carrying costs in K $

Admin. time in hrs.

Boston Area Customers

in K $

Assumptions --->

1.18

4.7

1.4

5.75

Boston

15% $1,369 $2.0

$840

$2,209

1

3.56

12.3

1.18

4.7

1.4

5.75

Boston

100% $2,461 $4.1

$1,722 $4,183

1

0 3.56 11.3

$3,647

10.2

4.23

2.5

1.7

4.48

Dulles

100% $1,925 $4.1

$1,722

1

0.2 6.14 9.2

9.1

2.76

2.1

2.1

4.25

Philadelphia 100% $2,405 $4.1

$1,722 $4,127

1

0.2 3.18 8.1

specifically: Airville, PA.

Boston & Dulles

10.2

1.18

2.5 B 1.38 B n/a D 1.66 D 4.54

100% $1,910 $5.0

$2,100 $4,010

1

0.2 2.52 9.2

14.5

13.31 12.1 n/a

11.78

None

0% $1,177 $3.0

$1,260 $2,437

1

7.8 11.78 13.5

CONCLUSIONS: o The best cost and service level combination is in Dulles, Virginia at $3.6M in total costs with weighted average delivery times within one shift. o The cost of supporting ERO customers with "one shift or less" service levels is $1.2M per year (Dulles $3.6 less Milpitas $2.4M). o Maximum delivery time is two hours shorter in Dulles than Boston (10.2 Vs. 12.3). o Having 2 depots in ERO costs $400K per year and buys us 3 hours of cycle time for customers within 100 miles of Boston (1.38 Vs. 4.48 hrs.). Note: this analysis does not include Boston to Non-ERO customer demand which accounts for 33% of L/I demand. Example IBM Burlington.

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