Sport Obermeyer Case Study Solution

SPORT OBERMEYER, Ltd.

EMBA – SEPT 15 – ENG-BL – S2

TEAM A

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.)

In order to minimize the company’s risk of overstock due to inaccurate demand forecast in the first production phase, it would be recommended to order the minimum batch, i.e. 10,000 units. According to Exhibit 10, the total number of all 10 styles added up to 20,000 units. Therefore, this number shall

So inviting retailers, especially sales or shop managers, to help with the demand forecasting is a good idea.

Obtain market feedback:

It is important to obtain market feedback earlier thereby converting some speculative production to reactive production. Sport Obermeyer should listen to ‘early orders’ and get sneak preview of the new line and imply feedback to their production plan. They may create ‘early order discount’ campaign to get quality/quantitate feedback.

Reduce lead times:

It can be achieved by either actually reducing the lead times or by encouraging the retailers to place their orders in advance. The pre-order of the raw materials (fabric) by Obersport would also help Obermeyer since this would reduce the lead-times of acquiring this fabric during periods of unexpected jump in demand. If the whole process from delivering raw material to finished goods can be completed in a shorter period of time, the company would be able to produce at a time when demand can be forecasted at almost 100% accuracy. The disadvantage of this method is that it would create additional costs of getting raw materials quicker and shipping finished goods at a faster speed and higher cost but it would reduce sunk cost from excess inventory and increase the market share due to

However, HK plant would still be kept as a place for smaller size order and unexpected risky circumstances, which may occur in other locations.

** I agree with short term and long term relationship with HK and China. But I would like to add one more recommendation which is using HK and China based on the product categories -;

HK vs. China Comparison HK China

Production Manufacturing at twice the speed that of China Slow manufacturing

Lead time Acceptable Several weeks longer than HK

Manpower In case of parka line, requires 10workers In case of parka line, requires 10workers

Quality Good and reliable quality Lower than HK

Regulation US Government imposes stringent quota restriction for imports from China. This may not applicable for Hong Kong.

So my recommendation is to source half of it parkas from China and half from Hong Kong would be an efficient operational change to improve performance in Sport Obermeyer. Along with that, Sport Obermeyer should categorize product in two categories: more popular and less popular. More popular should be sourced through HK since production will be faster and the quality will be higher and more reliable. Less popular should source from