Sport Obermeyer Case Study
These can be lead times, demand signal processing, order batcing, price fluctuations and shortages. All the variations lead to extensive inventory due to the need for large safety stocks, unacceptable service levels and product obsolescence.
According to Simchi-levi et al (2002), when it is difficult to match demand and supply, it leads to long lead times caused by the bullwhip effect. There is a relationship that exists between bullwhip effect and lead time, for long lead times, a small change in the estimate of demand variability implies a significant change in stock, leading to significant changes in order quantities which lead to a bullwhip effect.
According to the Chandra (2002), the time period of forecasting for seasonal products depends on certain characteristics. For most seasonal products the life cycle stage is very short, there is high variability and very long replenishment time. Seasonal demand variations include innovative and fashion products with a short life cycle. Huge variations and fluctuations for seasonal products bring the risk of obsolete inventory, lost sales, poor service level which leads to products being sold at discounts (Chandra,