Sport Obermeyer Ltd Group-9

Problem Statement
Method 1 Determining Production Quantities
 The company was left with surplus inventory at the very end of each season for the 80% or 20%
2x Coefficient of
styles and colors that retailers had not ordered: the worst-performing fashions were Average of the Adjusted
Style Standard Variation
offered at steep discounts, frequently much below their manufacturing cost. Forecast average Amount
Deviation (Risk)
forecast
 Despite the fact that popular products were certainly appealing, the company regularly
Gail 1,017 388 38.15% 813.6 814
ran out of its bestselling item, which resulted in significant revenue loss every year due Isis 1,042 646 62.00% 208.4 209
to the company's failure to predict which items would become best-sellers. Entice 1,358 496 36.52% 1086.4 1087
Purpose Assault 2,525 680 26.93% 2020 2020
 To determine no of styles of women parkas that needs to be produced in initial Teri 1,100 762 69.27% 220 220
production run for 1993-1994 line. Electra 2,150 807 37.53% 1720 1720

Value Capabilities Assets Processes Stephanie 1,113 1,048 94.16% 222.6 223

Operational Decisions: Trade Offs: Seduced 4,017 1,113 27.71% 3213.6 3214
Forecasting Process, Product variety vs Anita 3,296 2,094 63.53% 659.2 660
Procurement Decions, Production cost, Daphne 2,383 1,394 58.50% 476.6 477
Supplier Relationship, Production Totals 20,000 9,800.40 9804
Quality Control and Location and In/Outsourcing
Technology Integration Quality vs Cost Capacity size Decision Process Assumptions:
Operating Risk Management We categorize the coefficient of variation into 2 groups:
KPI'S:
System: Flexible vs Process
Dedicated Initial order quantity is 10,000 units.
Supplier
Supply Chain Production
Relaiability(Hong Kong & Automation If coefficient of variation > 50%. Then it is considered to be
Management
China) risky forecast.
Collabration with If coefficient of variation <= 50%. Then it is considered to
Order Cycle Time Scale
Suppliers Innovation be non-risky forecast.
Transportation Cost Decision Making Onshore vs Using this information, we order 80% of parkas that were
Process Offshore
Customer Satisfaction not risky and order 20% of parkas that were risky.
Production
Initial Order Quantities for All styles made in Hong
China and Hongkong Method 2: Determining Production Quantities All styles made in China:
Kong:
Initial First Period First Period Order quantity
Style First Period Order quantity
Orders Production Production in China
Average 2x Standard Production in Hong Kong
Gail 814 Style Quantity Quantity
Forecast Deviation Quantity
Isis 600 Max(0, µ-𝑘𝜎
)
Max (0, µ-𝑘) Max(0, µ-𝑘𝜎
)
Entice 1087
Gail 1,017 388 605 605 1200
605 605
Assault 2020
Isis 1,042 646 357 357 1200
357 600
Teri 600
Entice 1,358 496 832 832 1200
832 832
Electra 880
Assault 2,525 680 1,804 1,804 1,804
1,804 1,804
Stephanie 600 Teri 1,100 762 292 292 1200
292 600
Electra 2,150 807 1,294 1,294 1,294
Seduced 3214 1,294 1,294
Stephanie 1,113 1,048 1 1 1200
Anita 660 1 600
Seduced 4,017 1,113 2,836 2,836 2,836
Daphne 600 2,836 2,836
Hong Kong Anita 3,296 2,094 1,075 1,075 1200
Totals 11,075 1,075 1,075
China
Daphne 2,383 1,394 904 904 1200
904 904
Total 19991 9383 10,000 10,000 14,334
10,000 11,150
Recommendations Aspect Sport Obermeyer Le Club
Input sources for Buying Committee Wine experts' opinions,
forecasting forecasts, retailer taste considerations,
According to method-1 analysis of demand forecasting: feedback from Las and seasonality
 Gail, Isis, Entice, Teri, Electra, Stephanie, Anita, Daphne must be produced in Vegas trade show
Hong Kong. Purchase Order In Two Phases In One Phase
 Entice, Seduced must be produced in China. Commitment