Sports Obermeyer Ltd

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Our group has identified some of the issues by reading this case and those are discussed below:

We found that there is an inaccurate forecast made by the company during the Fashion Week, though they used to get 80% of their total annual orders based on the performance of the Las Vegas show there were issues of excess production of non-popular items (unwanted designs) and shortage of some of the fast moving apparels. The company failed to forecast their retailer’s annual demands. There was very large product variety and there were very large number of competitors available in the market that made sports obermeyer difficult to predict the demand of their products.

According to our point of view the company should obtain individual forecast from their managers, estimates the risk associated with early production of each style and should learn from the history and their past records and should examine the previous demands and their ability to provide the supply. By analyzing the historic data company can predict more accurately the future demand from the retailers. The company should try to obtain early market demand forecast by getting feedback from retailers much before the Las Vegas show to achieve better and accurate forecast.

Our group recommends of how much Wally Obermeyer should order during the initial phase of production by considering the given criteria

Assumptions:

- All ten styles in sample problem are made in Hong Kong

- We’ve ignore the price difference

[I’ll post here the excel sheet calculations with formulas I’ll use and attached after this page]

PRODUCTION PLANNING EXAMPLE

Rococo Parka

Wholesale price $112.50

Average profit 24% X 112.50 = $27

Average loss 8% X 112.50 = $9

Ignoring all other constraints recommended target stock out probability is:

1-Profit / (Profit + Risk)

= 8% / (24%+8%) = 25%

The objective of initial phase 10,000 quantity is to achieve EOQ and to maximize return on investment.

Return on Investment = Expected Profit / Invested Capital

One of the main issues was where to manufacture their products, whether China or HK both have some or other advantages and disadvantages attached to it.

HONG KONG

CHINA

Faster production

Slower production

Expensive labor

Cheap labor

Smaller lot size

Larger lot size

More flexible

Less flexible

Also the company has a practice of sourcing raw material from different countries and different suppliers which increases its lead time as the material is not available as and when needed and in the quantity it required.

There were some operational issues and threat from the competitors we identified which we’ll discuss on later part of our report.

By analyzing the given facts out group recommends to Sports Obermeyer Ltd to improve their Chinese labor productivity by cross training of Chinese and H.K. workers to get trained the Chinese worker as the H.K. workers are. The company should also focus on how much time it is losing by sourcing raw material from different location it should try to establish new supplier relation in a geographically nearby area to reduce the lead time of material orders and to ensure timely delivery. The company can also increase some more subcontractors to increase its production capacity, and overcome minimum production quantity issue by having a dedicated production unit within the organization.

There are operational recommendations our group wishes to suggest Wally Obersports to improve the performance which are

[NOW NOOPUR IT’S YOUR PART]

AFTER YOUR CALCULATIONS TRY TO WRITE 1 PARA ON THE RECOMMENDATIONS, I’VE IDENTIFIED SOME 4-5 POINTS ON SATURDAY AND YOU HAVE THE PICTURES OF THAT NOTE.

WE STILL MISS THE 3RD QUE ABT SHORT TERM AND LONG TERM

IF POSSIBLE LETS STAY BACK FOR 1 HOUR AFTER HRM LEC TODAY AND FINISH THIS THING