Case Solution:

Sports Obermeyer
Submitted
By
Name
Group

A06

Amanpreet
Ankit Kumpawat
Akhil Manikantha

Reg No
0033/5
1
0054/5
1
0118/5
1
0161/5

Q1. Initial Production Plan for

different styles
Style

Average

Std Dev

Profit

Gail

1016.667

194.079

1278.475

22498.17

Isis

1041.667

323.1357

1477.57

18243.88

Entise

1358.333

247.8239

1692.643

22047.87

Assault

2525

340.2205

2983.951

48312.63

Teri

1100

380.7887

1613.676

22946.43

Electra

2150

403.7326

2694.627

75062.98

stepanie

1112.5

523.8678

1819.187

21340.82

Seduced

4016.667

556.477

4767.343

62110.25

Anitha

3295.833

1046.95

4708.147

57229.37

Daphny

2383.333

696.8979

3323.434

63679.52

Q: Why is initial ordering in November

required?

The 1st order cycle items have to be delivered to retailers by August so

that the squarefootage days can be maximized.
The lead time for 1st order cycle is 7 months as below:

3 months for activities before cutting and sewing

2 months for activities of cutting and sewing
~45 days for delivery from China / Hong Kong to American warehouse of Obermeyer
~15 days (2 weeks) for delivery from warehouse to retailers

Thus, if 1st order is delayed, receipt at retailer will be delayed beyond

August leading to unavailability of items in peak selling season; implies
high lost sales and potential losses for the company
Based on sales data in August, forecast for replenishment orders of peak
season could be more accurate

Q4: What operational changes would you recommend to

improve performance ?

1st order cycle should have more numbers of items/ styles where
demand forecast is more accurate
Possibility to speed up production for 2nd order cycle. This will allow
some flexibility to ship the last batches by sea rather than by air
thus saving costs for Obermeyer
Relaying the point of sales information quickly to suppliers for
timely delivery of replenishment orders
Offering trade discounts/ periodic pricing to promote early orders.
Invest in strategies like loyalty programs tailored for different
segments to foster retailer-customer relationship

Q5: Choice of sourcing between Hong Kong and China for

both short term and long term?
Business Requirements
Quick response to customer needs; mainly for better replenishment order
completion
Improve demand forecasting techniques. Will allow Obermeyer to better
plan production quantities thus reducing inventories and lost sales
Reductions in lead times to allow Obermeyer to order later. By ordering
later, Obermeyer would have better demand forecasts based on initial
ordering by retailers. This will allow reduction of lost sales & inventory
which are the main problems for Obermeyer in current times
Keep costs low
Low minimum order quantities to allow flexibility in varying production at
SKU level

Q5: Choice of sourcing between Hong Kong and China

for both short term and long term?
Short term strategy
Assumptions
Obermeyer will continue traditional methods for demand forecasting OR that
its demand forecast accuracy will be less
New methods of demand forecasting being employed by Wally will not be
very useful in short term as it will develop accuracy over time through
iterations and more data
Drastic changes in production capacity allocation is not possible
Productivity levels in the 2 countries cannot change drastically
Sourcing Strategy
Since demand side uncertainty is assumed to remain high during 1 st order
cycle, most of this sourcing should be done from Hong Kong (so that we can
maximize the benefit of shorter Minimum order quantities)

Q5: Choice of sourcing between Hong Kong and China for both short term and long
term?
Long term strategy
Assumptions

Obermeyer will develop analytical techniques to better forecast demand

Drastic changes in production capacity allocation is possible

Chinese factories can improve productivity in long term

Sourcing Strategy

Major production for 1st order cycle from Hong Kong. Even though costs of procurement from Hong
Kong are more, minimum order quantities are lesser and assuming lead times reduce in long term,
overall result will be better sales and profits for the company

To maintain share of production between Hong Kong and China, the 2nd order cycle can be given to
subcontractors based in China

If we are able to reduce lead times in Hong Kong significantly, we should shift major production to
Hong Kong and reduce share of business for China. This will allow to place order to Raymond Tse after
majority retailer orders are received and still receive the order by August

Another option will be to provide better training in China to get them to similar levels of productivity
as Hong Kong workers. This will allow to avail benefits of better productivity, shorter lead times at the
same time reducing per unit labor costs

Currently, U.S regulations for trade with China are a concern and hence they should push for viable