1. WAYNE L. WEBB CAO Project Manager

2. Automated order forecasting and generation system Utilizes historical sales data Limited human intervention Seeks to achieve just-in-time inventory management CAO Concept

3. Overall average score for CAO stores – 2002 – 4.20 – 2003 – 4.25 – 2004 – 4.36 – 2005 – 4.38 – 2006 – 4.48 – 2007 – 4.49 – 2008 – 4.50 Steady increase since CAO deployment in January 2002 Year-End Customer Satisfaction Survey: “Well-stocked, Full Shelves”

4. Increased customer satisfaction – Higher in-stock rates – Increased Commissary Customer Service Survey (CCSS) scores Reduced inventory levels – Higher inventory turns – Loss theft indicators Informed decision making Improved shelf space allocation Increased sales CAO Benefits

5. Good communication = success Manager / Supervisor / Merchandiser Other CAOSs QAEs Admin office – VCMs Distributors Industry / sales representatives Vendor / contract stockers Cashiers Receiving personnel Janitors Communication

6. Recommended Order Sales DataBOH Shelf Maximums Order Requirements

7. Sales data –Average weekly sales –Projected weekly demand –Day of the week index –Forecast error safety stock Order Requirements Sales Data

8. Balance on Hand (BOH) –On-hand inventory of shelf and backroom Sales Promotion System (SPS) Reserve –Inventory on hand for future promotions Quantity available –BOH minus SPS Reserve Order Requirements Sales DataBOH

9. Shelf maximums set based on: –Existing shelf space –Set higher for never-outs –Set lower for low demand Shelf minimums not part of order calculation when shelf max is in place Facings are informational only Order Requirements Sales DataBOH Shelf Maximums

10. Recommended Order Sales DataBOH Shelf Maximums Without all three being completed with correct information, the system does not function correctly Order Requirements 3 Vital Factors Control Ordering

11. If demand exceeds shelf maximum, CAO will order to fulfill demand and safety stock requirements A report generates detailing these items and can be used: –To expand shelf space –As a pull sheet Phased out/deleted items –CAO continues to order phased out items until item is flagged as deleted – once deleted, the item will be automatically deactivated Order Requirements

12. 66% of the active items at Langley AFB Commissary sell less than 21 units per week less than 3 units a day … As of 8/11/06 Fact

13. Velocity CodesABCDEF Range of Velocity Codes 5%10%20%30%20%15% Safety Stock Percentage 30%15%10% 0% Case Rounding Factors 85% 90% 95% Safety Stock –Velocity Code Safety Stock Safety Stock Based on an Item’s Velocity Code (A thru F) –Forecast Error Safety Stock Additional safety stock calculated based on a comparison of the order forecasts of the last 2 weeks to actual sales during that period Other Elements of the Algorithm

14. Lead time –The number of days between the date of the order creation and the required delivery date (RDD) Period to Order For (PTOF) –The number of sales days that the order being calculated is to cover Other Elements of the Algorithm

15. Order builds on Wednesday, RDD on Friday, PAD on Saturday Shelf maximum: 48 UPK: 12 Velocity code B – case rounding factor = 85% (10.2 units) Starting BOH: 36 Due-in: 12 Lead time demand: 12 (Wednesday-2, Thursday-4, Friday-6) Put away demand (Saturday): 9 36 + 12 – 12 = 36 (Virtual BOH, Friday night) The difference between virtual BOH and shelf maximum is greater than 85% of UPK, so one case will be ordered Shelf maximum (48) minus virtual BOH (36) = 12 Other Elements of the Algorithm Ordering Scenario

16. Store manages their own order / distributor schedule Accommodates holiday store closures, distributor closures for inventory, etc., using an override feature CAO will recalculate projected orders based on the new schedule Can create multiple orders with multiple RDDs Store Ordering Schedule

17. Shippers, floor stands / pallet modules Items received via the Case and Truckload Sale (CATS) system Demos VCMs – merchandise returned to vendor Mis-picks Unidentified shortages Factors Impacting BOH Accuracy

18. Store runs CAO Facility New Item Report Generates distinct pull once a week using FDS Upon receipt, merchandise to shelf Activate and establish shelf maximum CAO orders to fill shelf Ordering initially based on replenishment Forecast developed when there is history of sales New Items

19. Maintain orders –Edit current order –Review two-week order history Manage counts –Establish / correct BOH –Process salvage –Transfer items –Flagged Item Report (NIS, highs, and lows) RF HHT Functionality

20. Manage items –Set shelf maximums and facings –Activate / deactivate items –View CAO Item Detail Reports –Salvage –Transfer –Flagged Item Report RF HHT Functionality

21. Lists items and average weekly demand unique to store Can be created and released in advance If released in advance, due-ins put into reserve If received in advance of promotion start date, BOH put into reserve (SPS Reserve) SPS Reserve enables CAO to continue to order for shelf Once promotion starts, CAOSs must order manually to keep displays full Sales Promotion System (SPS)

22. Flag local promotions in CAO –RF HHT used to capture items promoted outside MBU window to prevent over-ordering after promotion –Can be used to flag items heavily demo'ed, couponed, or advertised Managing Sales History

23. Two functions – markdown and (store / vendor) throwaway Process streamlined by requiring fewer key strokes Automatically computes markdown price Saves item information for 2 months plus current month Salvage report has various sort options, enabling user to print by vendor number, PIIN number, distributor, and department Salvage Program

24. User defined date range – applies to sales days Will temporarily modify shelf maximum factor value for date range specified User will define shelf maximum factor percentage (+/-) for various combinations of D/C/G, distributor, and velocity code Order Ramp Factor

25. Identify non-MBU promotions Give advance notice of heavily couponed items National advertising Spot BOH discrepancies Reduce mis-picks and shortages Follow-up with vendor stockers What You Can Do to Help

26. Past –Payday demand - based on last 8 payday weeks –Non-payday demand - based on last 8 non-payday weeks –Override schedules –Shelf max –Visibility of 856 Future –Daily forecast Enhancements

27. Item Movement Review Item Movement Data

28. Weekly Demand / Promotions Check Average Weekly Demand Check Date Last Promoted

29. Sales History Review 60 Weeks Sales History

31. DeCA Help Desk 1-888-551-1598 or 804-734-8000, ext 48140 (Functional, technical, C-Move or RH-HHT issues) HQ DeCA Ivy Beres 804-734-8000, ext 48211 Bob Crecink 804-734-8000, ext 48983 Robert A. Robin 804-734-8000, ext 48672 Wayne L. Webb 804-734-8000, ext 48854 Gary Williams 804-734-8000, ext 48731 For Assistance