SCM Case Reebok NFL Replica Jerseys:

Members: Cherry Sam Robbin Sarah

A Case for Postponement

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Outline

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Reebok background

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About NFL

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About NFL

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AFC - North and South teams

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AFC - West and East teams

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NFC - North and South teams

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NFC - West and East teams

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2003 Super bowl

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Problem

I have a warehouse full of jerseys out there and retailers are screaming for the teams and players I dont have! Every year it seems like we have the right mix of inventory going into the season, and then some team that no one expected to do well gets off to a 4-0 start and the team everyone expected to contend for the Super Bowl Is losing games. Suddenly I have 1000s of jerseys I cant sell and 1000s of order I cant fill

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Retailer states
The Reebok line is great. Were excited and anxious at the same time. [In the past] the fear was that one team jersey could be found from five different manufacturers at five different stores in the mall. Now the [question] is, will the consumer have to pay an extra $20 for a team jersey because it is from Reebok? As a top-tier retailer in apparel, well 3/17/12 only have access to that one brand.

Demand for NFL replica jerseys

Customer

demand fluctuate Driven by the excitement and

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Jersey

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The sales cycle

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Reebok supply chain

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Reebok supply chain

Con tract Manu factu rers (CM) Fabric Inventory Cu t, s ew , an d as sembly Blan k In ven tory at s uppl ier Reebok (India napolis ) Blan k Goods In ve ntory S hippin g S creen Prin ting

S creen Prin ting FG Inventory

2 - 16 weeks 4 weeks 4 weeks 1 we eks

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Purchase planning

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Question

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Question 1

Generate team and player level forecast Offer 20% discount for early order in January-February Prepare 1,728 dressed Jerseys for any player Prepare blank Jerseys (shared with other apparel items) Provide printing facility in the Reeboks DC (capacity 10,000 Jerseys per day) Outsource the deficit of production local manufacturing
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Given the Given uncertainty associated with player demand, how with player should the uncertaintyplanning for NFL Reebok approach inventory associated demand, how should Reebok approach inventory planning for NFL

Question 2
What should Reeboks goal be? Should Reebok minimize inventory at the end of the season? Or Maximizing profits? Can Reebok achieve both? What service level should Reebok provide to its customer?

The goal: To provide customer with a quality product, in the right time, and in the right quantity. Reebok should minimize its inventory to maximize its profit by reducing holding cost and the risk of leftover in each season Yes, the key is in the forecast. The more accurate, the greater chance to achieve both of the goals. High service level: providing all customer order, including the revised order
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Question 3

known demand to place order for their supplier. Forecast developed based on: past sales, team and player performance, market intelligence, advance order, informed guess. Forecast is revised as the sales cycle unfold. Cost of blank jersey = $9.5 Cost of Dressed jersey = $10.9 Cost of decorating a blank jersey in Indianapolis = $2.4 Salvage value = $7 Cost of underage for dressed jerseys: 1.Finished in contract manufacturers: $10.9 2.Finished in Indianapolis: $9.5+$2.4=$11.9 Cost of overage for dressed jerseys: $10.9 - $7 = $3.9
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Are the models in Section 2.2.2 helpful here? What is the cost of underage for a dressed Jersey? What is the cost of overage for a Yes. Reebok company uses combination of forecast and dressed Jersey?

Question 3
How might Reebok decide between dressed Jersey and blank Jersey?

Order on July-October: blank Jersey (stored in CM) , January-June: dressed Jerseys (known demand) ,combination of dressed Jerseys (order) and blank Jersey (forecast). Dressed Jerseys are made based on the order and minimum order quantity for each player. While blank Jerseys are alocated for unexpected demand and hot-market item.

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Question 4
Using the forecast for the New England Partiots, what is the optimal quantity to order for each player? For blank Jerseys? What profit do you expect from Reebok? How much and what type of inventory is expected to be leftover at the end of the season? The first step is to calculate the overage and underage costs for both Blank and Dressed Given information Wholesale sale price (P) = $24 Cost of dressed (Cd) = $10.9 Cost of capacity (Cc) =$0 The next step is to calculate the critical ratio Overage for blank = Cb - Sb = 9.5-8.46 =1.04 Underage for blank = P - Cb Cnad Cc =24-9.5-2.4 = 12.1 Overage for dressed = Cd Sd = 10.9-7 = 3.9 Underage for blank = P-Cd = 24-10.9 = 13.1 Critical ratio (Blank) = underage / (underage + overage) =12.1/(12.1+1.04)=0.92 Critical ratio (Dressed) = underage / (underage + overage) =12.7/(12.7+3.48)=0.77 To calculate the optimal quantities , assume the provided forecasts are normally 3/17/12 distributed Cost of blank (Cb) = $9.5 Cost to decorate in North American (Cnad) = $2.4 Salvage value for dressed (Sd) = $7

Salvage value for blank (Sb) = $8.46

Question 4
Using the forecast for the New England Partiots, what is the optimal quantity to order for each player? For blank Jerseys? What profit do you expect from Reebok? How much and what type of inventory is expected to be leftover at the end of the season? Following this purchase plan , Reebok can expected the following sales results:
Player NEW ENG PATRIOT Tom #12 TY#24 TROY#80 ADAM#04 TEDY#54 41018 14092 10879 10501 7983 28918 9935 7670 6688 5084 1948 22898 83142 12100 4157 3209 3812 2898 1111 15129 42416 1845 634 487 581 442 169 377 4537 331640.24 113938.27 87955.3 72748.54 55302.94 21192.31 224946.72 907724.33 Q E[Sold] E[unsold] E[unmet] E[profit]

ANTOWAIN#3 3059 2 Other players 38027 Total 125558

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