Abstract– In the scenario developed here, most types of calcium-aluminum-rich inclusions (CAIs) formed near the Sun where they developed Wark-Lovering rims before being transported by aerodynamic forces throughout the nebula. The amount of ambient dust in the nebula varied with heliocentric distance, peaking in the CV–CK formation location. Literature data show that accretionary rims (which occur outside the Wark-Lovering rims) around CAIs contain substantial 16O-rich forsterite, suggesting that, at this time, the ambient dust in the nebula consisted largely of 16O-rich forsterite. Individual sub-millimeter-size Compact Type-A CAIs (each surrounded by a Wark-Lovering rim) collided in the CV–CK region and stuck together (in a manner similar to that of sibling compound chondrules); the CTAs were mixed with small amounts of 16O-rich mafic dust and formed centimeter-size compound objects (large Fluffy Type-A CAIs) after experiencing minor melting. In contrast to other types of CAIs, centimeter-size Type-B CAIs formed directly in the CV–CK region after gehlenite-rich Compact Type-A CAIs collided and stuck together, incorporated significant amounts of 16O-rich forsteritic dust (on the order of 10–15%) and probably some anorthite, and experienced extensive melting and partial evaporation. (Enveloping compound chondrules formed in an analogous manner.) In those cases where appreciably higher amounts of 16O-rich forsterite (on the order of 25%) (and perhaps minor anorthite and pyroxene) were incorporated into compound Type-A objects prior to melting, centimeter-size forsterite-bearing Type-B CAIs (B3 inclusions) were produced. Type-B1 inclusions formed from B2 inclusions that collided with and stuck to melilite-rich Compact Type-A CAIs and experienced high-temperature processing.