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    SanJana Nahata
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    Athletic Knit is a Toronto-based manufacturer of sports uniforms, mainly in Canada and the US. It earns over 80% of its revenue from hockey products. It uses a B2B sales model and does not sell directly to customers. Its mission is to provide high-quality sportswear and services. The industry is extremely competitive, dominated by multinational corporations, low-cost importers, and local manufacturers. Previously, AK dealt with agents rather than customers directly and retailers were pleased with its delivery and quality. However, it faced challenges like inventory write-downs, fluctuating production costs, and decreased sales during economic crises. It implemented an ABC approach and EOQ model to better manage inventory levels and

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    Athletic Knit is a Toronto-based manufacturer of sports uniforms, mainly in Canada and the US. It earns over 80% of its revenue from hockey products. It uses a B2B sales model and does not sell directly to customers. Its mission is to provide high-quality sportswear and services. The industry is extremely competitive, dominated by multinational corporations, low-cost importers, and local manufacturers. Previously, AK dealt with agents rather than customers directly and retailers were pleased with its delivery and quality. However, it faced challenges like inventory write-downs, fluctuating production costs, and decreased sales during economic crises. It implemented an ABC approach and EOQ model to better manage inventory levels and

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    © All Rights Reserved
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    31 views9 pages

    Athletic Knit Company

    Uploaded by

    SanJana Nahata
    Athletic Knit is a Toronto-based manufacturer of sports uniforms, mainly in Canada and the US. It earns over 80% of its revenue from hockey products. It uses a B2B sales model and does not sell directly to customers. Its mission is to provide high-quality sportswear and services. The industry is extremely competitive, dominated by multinational corporations, low-cost importers, and local manufacturers. Previously, AK dealt with agents rather than customers directly and retailers were pleased with its delivery and quality. However, it faced challenges like inventory write-downs, fluctuating production costs, and decreased sales during economic crises. It implemented an ABC approach and EOQ model to better manage inventory levels and

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 9

    ATHLETIC

    KNIT
    COMPANY
    Athletic knit is a Toronto based manufacturer
    of sports team uniform, mainly in Canada and
    us.
    The AK has earned over 80% revenue from
    ATHLETIC sales of hockey related products.

    KNIT B2b sales channel and no direct selling to


    COMPANY customers.

    mission is to provide high quality sportswear


    and services to its customers.
    Ak’s industry is extremely
    competitive.

    ATHLETIC Three major groups of manufacturers


    dominate this industry
    UNIFORM • Multinational corporations like nike, adidas etc.

    INDUSTRY • Low- cost distributions importing products from


    China and Bangladesh
    • Local Independent Manufactures
    The focus of the sales AK never dealt with The retailers were
    SALES AND model were the sales
    representatives.
    customers directly.
    They had agents for
    pleased with the
    services of delivery
    DISTRIBUTION selling their products and quality provided
    by the company

    AK delivery services
    were fast compared to
    their competitors as
    they used to stock the
    products prior to the
    sales.
    Substantial Inventory write down

    CHALLENGES
    Fluctuating cost of production of a
    product.

    During financial crises due to high


    unemployment sales decreased
    drastically.
    SOLUTION FOR INVENTORY WRITEUP

    ABC approach

    ● Rate items from A to C on the basis of consumption from highest to lowest.

    A rated – highest annual rated 80 % of annual consumption


    goods
    B rated – Medium consumption 15 % of annual consumption
    value
    C rated – Lowest consumption 5 % of annual consumption
    value value
    EPL method
    • EPL = SQRT(2*55.5*47693.6/0.8458*(1-(47693.6/88136)))= 3884.33
    • Ideal production lot size =3885

    EOQ method

    EPL VS EOQ • Class A:


    EOQ = SQRT (2*A*D/h)= SQRT (2*55.5*4824.5/ 0.8458)= 795.7= 796

    METHOD • Class B:
     EOQ = SQRT (2*A*D/h)= SQRT (2*55.5*2170.9/ 0.8458)= 533.76= 534
    • Class C:
     EOQ = SQRT (2*A*D/h)= SQRT (2*55.5*1026.05/ 0.8458)= 366.95= 367
    INVENTORY LEVELS WITH EOQ AND EPL
    ● The average inventory by the EPL model is 6843/2 = 3422 units

    The average inventory if the EOQ model is implemented is Q/2.


    From previous solutions we know that optimum order quantity for Class A, Class B and Class C
    products.

    ● Average Inventory for Class A = Q/2 = 796/2= 398 units


    ● Average Inventory for Class B = Q/2= 534/2= 267 units
    ● Average Inventory for Class C = Q/2= 367/2= 183.5 units

    Total Average Inventory will be 848.5 units. 

    After moving from the EPL model to the EOQ model,

    AK’s average inventory will be reduced from 3422 units to 848.5 units.


     
    This Photo by Unknown Author is licensed under CC BY

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