SportObemeyer

Logistics and Supply Chain Management Case Submission

Sport Obermeyer

Assuming Obermeyer’s initial production commitment must be at least 10,000 units.
Problem Statement1: using the sample data given in Table 2.20 of the case in the text make a recommendation of how many units of each style Obermeyer should order during the initial phase of production. Assume that all 10 styles in the sample problem are made in Hong Kong.

c_u
24%

c-o
8%

Style
Mean
S.d optimal order level hongkong hongkong adjusted with minimum order of 600
Seduced
4017
1113
4768
1809
1809
Assault
2525
680
2984
1132
1132
Electra
2150
807
2694
1022
1022
Anita
3296
2094
4708
1786
1786
Daphne
2383
1394
3323
1261
1261
Entice
1358
496
1693
642
642
Gail
1017
388
1279
485
600
Isis
1042
646
1478
561
600
Teri
1100
762
1614
612
612
Stephanie
1113
1048
1820
690
690
Total
20001

26360
10000
10154

Style
Mean
S.d
Safety Factor
Seduced
4017
1113
2.5
Assault
2525
680
1.9
Electra
2150
807
1.2
Anita
3296
2094
1.0
Daphne
2383
1394
0.8
Entice
1358
496
0.3
Gail
1017
388
0
Isis
1042
646
0
Teri
1100
762
0
Stephanie
1113
1048
0

When there is a constraint of minimum order size of 600, try to produce styles with higher “safety factor” in the initial phase of production.
Definitions of safety factor are as follows:
Type 1 parka (μi > 1200 ), safety factor = (μi – 1200)/σi
Type 2 parka (μi < 600 ), safety factor = (600–μi )/σi
Type 3 parka (600< μi < 1200 ), safety factor = 0
Notice that Type 1 products are safe to produce in the initial production stage since we are not likely to be overly constrained by the minimum order size. However, Type 3 products are the riskiest products to make in the initial production period. If commit to producing some amount during the initial production period, we will likely not be able to adjust