BUS70CS1

SPORT OBERMEYER ASSIGNMENT 1 Case Study: Sport Obermeyer Assignment Faizan Malik Liberty University August 28, 2022

SPORT OBERMEYER ASSIGNMENT 2 1. Using the sample data given in Exhibit 10, make a recommendation for how many units of each style Wally Obermeyer should order during the initial phase of production. Assume that all ten styles in the sample problem are made in Hong Kong and that Obermeyer’s initial production commitment must be at least 10,000 units. (Ignore price differences among styles in your initial analysis). Determine the initial phase of production for both Hong Kong and China. According to Narayana et al. (2019), forecast accuracy is significant improved when the organization’s forecasted demand is established on customer point of sale, as opposed to incoming sales, a model that Wally Obermeyer should consider when assembling their commitment schedule. As described in the Simchi-Levi et al. text, Wally Obermeyer currently offers ten unique style of women’s parkas, which are manufactured between Hong Kong and China. In the below table, we analyze all of the available Parka styles offered by Wally Obermeyer, along with the organization’s average forecast, standard deviation, and 2x standard deviation. Average forecast Standard deviation 2x standard deviation 1st. Period Quarterly Order Style Gail 1017 194 388 629 Isis 1042 323 646 396 Entice 1358 248 496 862 Assault 2525 340 680 1845 Teri 1100 381 762 338 Electra 2150 404 807 1343

SPORT OBERMEYER ASSIGNMENT 4 Anita 3296 1047 2094 1202 1202 Daphne 2383 697 1349 1034 1034 Total 20001 10618 11619 When analyzing production out of China, Obermeyer have the benefit of lower employee wages but also have a higher minimum ordering (1200 units per style). As a result, the overall production increases by 2,875 when producing solely out of China. Average forecast Standard deviation 2x standard deviation 1st. Period Quarterly Order China production Style Gail 1017 194 388 629 1200 Isis 1042 323 646 396 1200 Entice 1358 248 496 862 1200 Assault 2525 340 680 1845 1845 Teri 1100 381 762 338 1200 Electra 2150 404 807 1343 1343 Stephanie 1113 524 1048 65 1200 Seduced 4017 556 1113 2904 2904 Anita 3296 1047 2094 1202 1202 Daphne 2383 697 1349 1034 1200 Total 20001 10618 14494

SPORT OBERMEYER ASSIGNMENT 5 2. What operational changes would you recommend to Wally to improve performance? One of the first operational changes I would recommend to Wally would be to eliminate several of the less popular park style such as the Isis, Teri, Stephanie, and Daphne. By eliminating these styles which do not meet the minimum production quantity based on the organization’s forecast, they can avoid issues related to excess and idle inventory. The next recommendation to would be to improve upon lead time, which is currently longer than most would expect with an inconsistent demand from their customer base. As stated by Welborn (2008), having flexibility and lead time can contribute to the overall success of a supply chain, as decreasing lead time can to improved performance. Lastly, Wally should reconsider various aspects of their production process, specifically materials used for manufacturing their products. Materials that don’t require dyes or prints can further reduce lead times. 3. How should Obermeyer management think (both short-term and long-term) about sourcing in Hong Kong versus China? Obermeyer management would benefit from operating out of both China and Hong Kong, given both territories offer unique benefits and drawbacks. While China offers the benefits of cheaper labor and longer working hours, they do so while requiring higher lot sizes and more workers. China also is less flexible when compared to Hong Kong, with slower production times and decreased quality of products. Conversely, Hong Kong can produce higher quality products at a faster rate with fewer workers, albeit at a higher price and with limitation on working hours. As such, Obermeyer would benefit from using China for longer production runs and Hong Kong for shorter production runs. China would be used in situations where larger orders are required, thus allowing for decreased overhead for Obermeyer as customers are more likely to understand larger orders take more time. Hong Kong would be used to in situations where inventory would

SPORT OBERMEYER ASSIGNMENT 7 References Chen, Z., Murray, R., & Jones, R. M. (2007). Fashion supply chain organisation and management between the UK and China. Journal of Fashion Marketing and Management: An International Journal. Pressey, A. D., & Qiu, X. X. (2007). Buyer‐supplier relationship dissolution: the Chinese context. Journal of Business & Industrial Marketing. Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2009). Designing and managing the supply chain: concepts, strategies, and case studies . New York: McGraw-Hill/Irwin. Teller, C., Kotzab, H., Grant, D., & Holweg, C. (2016). The importance of key supplier relationship management in supply chains. International Journal of Retail & Distribution Management., 44(2). Welborn, C. (2008). Strengthening supply chains; Lead-time confidence intervals address issue of inherent variability as supply chains become more complex. OR/MS Today ., 35(3).