Sports Obermeyer Case Study Essay

1476 Words Dec 30th, 2010 6 Pages
Executive Summary
My decision is to find a methodology of calculating more accurate demand and supply figures to address the unpredictable world of short life cycle fashion. A good decision would result in minimizing the order cycle lead time necessary to produce the ski wear and have it delivered to retailers in time by establishing a method that would ensure each prediction as a personal decision making process and not the thoughts of a few strong-willed individuals. Another criterion would be by gathering data that would provide clear indication how end-consumers would respond to the company’s current line. A good solution would enable Obermeyer to decide on where and when to source each product (China vs. Hong Kong vs. an alternative
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Hong Kong is more expensive relative to both of these concerns, but can produce much quicker and with fewer workers.

Environmental and Root Cause Analysis
Due to uncertainty in demand forecasting, the result are stock-outs (-24% of whole sale prices), market downs (-8% of whole sale prices), old designs, high inventory holding costs and unable to fully profit from hit products. To access forecast certainty, we have to look into historical data based on forecast error and variability of demand. Rather than producing one joint forecast, each member of the purchasing committee does his own forecast based on their own experience and data. The deviation in view is good (See Exhibit 10). Exhibit 10 provides information for risk based production planning. Risk is measured by price, uncertainty and demand level. The relationship between risk and price is direct, increase in price relates to increase in risk. It is same relationship between risk and uncertainty. The only difference is when there is a higher demand, risk variability lowers. Using early production capacity (speculative capacity) for Stephanie as it is in low demand but high in variance and it’s the third expensive brand. There is much value in waiting for more information. Using Las Vegas orders (reactive capacity) for Seduced brand as its high in demand and low in variance and its cost is the cheapest. It shows highest in

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