Essays /

12 Obermeyer Essay

Essay preview

Sport Obermeyer Case

John H. Vande Vate
Spring, 2006
1

Issues
• Question: What are the issues driving this
case?
– How to measure demand uncertainty from
disparate forecasts
– How to allocate production between the
factories in Hong Kong and China
• How much of each product to make in each factory

2

Describe the Challenge
• Long lead times:
– It’s November ’92 and the company is starting
to make firm commitments for it’s ‘93 – 94
season.

• Little or no feedback from market
– First real signal at Vegas trade show in March

• Inaccurate forecasts
– Deep discounts
– Lost sales
3

Production Options
• Hong Kong



• Mainland (Guangdong, Lo Village)

More expensive
Smaller lot sizes
Faster
More flexible




Cheaper
Larger lot sizes
Slower
Less flexible

4

The Product
• 5 “Genders”
– Price
– Type of skier
– Fashion quotient

• Example (Adult man)



Fred (conservative, basic)
Rex (rich, latest fabrics and technologies)
Beige (hard core mountaineer, no-nonsense)
Klausie (showy, latest fashions)
5

The Product
• Gender
– Styles
– Colors
– Sizes

• Total Number of SKU’s: ~800

6

Service
• Deliver matching collections
simultaneously
• Deliver early in the season

7

The Process










Design (February ’92)
Prototypes (July ’92)
Final Designs (September ’92)
Sample Production, Fabric & Component orders (50%)
Cut & Sew begins (February, ’93)
Las Vegas show (March, ’93 80% of orders)
SO places final orders with OL
OL places orders for components
Alpine & Subcons Cut & Sew
Transport to Seattle (June – July)
Retailers want full delivery prior to start of season (early September ‘93)
– Replenishment orders from Retailers

Quotas!
8

Quotas
• Force delivery earlier in the season
• Last man loses.

9

The Critical Path of the SC



Contract for Greige
Production Plans set
Dying and printing
YKK Zippers

10

Driving Issues
• Question: What are the issues driving this
case?
– How to measure demand uncertainty from
disparate forecasts
– How to allocate production between the
factories in Hong Kong and China
• How much of each product to make in each factory

• How are these questions related?
11

Production Planning Example



Rococo Parka
Wholesale price $112.50
Average profit 24%*112.50 = $27
Average loss 8%*112.50 = $9

12

Sample Problem
Style
Price
Laura
Carolyn
Gail
$ 110.00
900
1,000
Isis
$ 99.00
800
700
Entice
$ 80.00
1,200
1,600
Assault
$ 90.00
2,500
1,900
Teri
$ 123.00
800
900
Electra
$ 173.00
2,500
1,900
Stephanie $ 133.00
600
900
Seduced $ 73.00
4,600
4,300
Anita
$ 93.00
4,400
3,300
Daphne
$ 148.00
1,700
3,500
Total
20,000
20,000

Individual Forecasts
Greg
Wendy
Tom
Wally
Average
Std. Dev 2X Std Dev
900
1,300
800
1,200
1,017
194
388
1,000
1,600
950
1,200
1,042
323
646
1,500
1,550
950
1,350
1,358
248
496
2,700
2,450
2,800
2,800
2,525
340
680
1,000
1,100
950
1,850
1,100
381
762
1,900
2,800
1,800
2,000
2,150
404
807
1,000
1,100
950
2,125
1,113
524
1,048
3,900
4,000
4,300
3,000
4,017
...

Read more

Keywords

+8 -3 0 0.05 0.08 0.1 0.15 0.2 0.24 0.25 0.6745 0.75 000 017 042 048 08 094 099 1 10 100 1000 1047 1048 1090 10k 11 110 110.00 1113 112.50 113 1148 12 1200 123.00 1240 125 1283 1299 13 133.00 1339 1394 1395 14 1400 145 148.00 15 150 1505 16 1647 1664 17 17.52 1714 173.00 1752 1767 1778.1474 1794 18 1808 1824 1824.04 186 1864 1864.10 1866 1869 1870 1889 19 1902 1928 1938 194 195 1952 1973 1988 2 20 200 2003 2005 2006 2094 21 216 2160 22 224 2247 23 235 2350 24 247 2478 248 25 25.7 250 26 26.40 26.9 263 2640 27 27.1 278 28 28.4 28.5 28.8 2822 2844 29 29.7 296 2976 2x 3 30 300 3000 3044 31 31.6 31.8 32 32.9 322 3225 323 32p 33 34 340 35 35.8 350 358 359 36 36.19 36.6 36.8 36.9 37 38 38.5 38.8 381 383 388 39.87 3937 394 4 40 40.3 40.8 400 404 408 4083 41.4 42.19 42.2 42.6 42.7 43.6 44.2 44.6 44.9 450 46.15 46.7 47.2 471 478 48.8 49.3 496 5 50 50.5 500 51.1 52.0 524 525 53.4 550 556 568 6 60.08 600 608 614 646 648 658 680 693 695 697 7 700 708 717 73 73.00 749 75 762 767 8 80 80.00 800 807 819 836 850 873 875 9 90.00 900 915 92 93 93.00 94 950 984 99.00 accept achiev ad adult alloc alpin also amount anita answer assault assum averag balanc basic begin beig beyond big binari bound bring buy calcul call capac capit carolyn case challeng chanc chang charg cheaper china ci ciqi clever collect color commit compani complet compon concav conclus conserv consid constraint contract core cost criteria critic cut daphn deal decis decreas deep deliv deliveri demand describ design desir dev deviat die differ discount dispar doh drive drop e.g earli earlier easi electra els end entic error even everi everyon everyth exact exampl exceed expect expens extra fabric factor factori fall fashion faster februari feedback final find firm first fix flexibl forc forecast fred full function gail gender get give goe got greater greg greig guangdong h hard high higher hit hk hong ignor inaccur increas indiffer individu inform initi invest ishong isi issu item john juli june kai klausi know kong l lagrang lambda larger largest las last later latest laura lead least leav less let li like limit line linear littl lo long look lose loss lost lot low lower m made mainland make man march market match max maxim mean measur min minimum month mountain much need newsvendor no-nonsens nonsens note novemb number obermey object ol omit one option order p parka past path pay per period phase place plan point posit prc price print prior probabl problem process produc product profit promis prototyp q qi quantiti question quota quotient rate reach real realist recal recomm recommend relat relationship remain replenish requir resolv retail return rex rich ridicul risk rococo s.t sale sampl sc season seattl second secondari seduc sell sens separ septemb servic set sew show showi side signal simplic simultan size skier sku slower smaller solv sport spring standard start std stephani stock stockout stop style subcon suggest target technolog teri think though time tom total trade transport treat tri two type uncertainti unit units/month use vand varianc vate vega villag walli want wendi wholesal won worri worth would yield ykk z zi zipper