Inventory and St. Louis
Background of SportStuff.com
SportStuff.com is founded in 1996 by Sanjay Gupta. The company is supplying affordable sports equipment for the parents to their children. Sanjay Gupta created the idea of this business because the parents complained that the children grow rapidly. It was not efficient and wasting money to replace the sports equipment for the children frequently. Since parents had to replace new expensive skates, skis, jackets, and shoes so often that it became of the rapid growth of children. Therefore, the company purchased used equipment from families and any surplus equipment from manufacturers and retailers and sold them over the Internet.
The business realized the needs of the target customers, parents. Therefore, the company was accepted by the public and the business grew rapidly. They had made $0.8 million business within one year. The successful starting of the business attracted and received significant venture capital support. In 1999, the company had leased the warehouse and the orders were packed and shipped by UPS to the customers all over the United States.
Main Problem of SportStuff.com
In January 2000, Sanjay Gupta and his management team evaluated the performance of the company in 1999. They estimated that the growth rate of the business will be about 80 percent per year in the following three years. Although the company were pleased with the growth in sales and profit, the increasing cost would be greater than the revenue if the supply chain network design didn’t change simultaneously. If the supply chain network design stayed the same, the company would lose sales without the appropriate capability. Also, in order to meet the increasing demand, the cost will increase at the same time, like laboring cost, inventory cost, transportation cost and fixed facility cost. Therefore, the supply chain network design of sportstuff.com has to change to meet the demand. The allocation of warehouse will involve different cost and affect
SportStuff.com is founded in 1996 by Sanjay Gupta. The company is supplying affordable sports equipment for the parents to their children. Sanjay Gupta created the idea of this business because the parents complained that the children grow rapidly. It was not efficient and wasting money to replace the sports equipment for the children frequently. Since parents had to replace new expensive skates, skis, jackets, and shoes so often that it became of the rapid growth of children. Therefore, the company purchased used equipment from families and any surplus equipment from manufacturers and retailers and sold them over the Internet.
The business realized the needs of the target customers, parents. Therefore, the company was accepted by the public and the business grew rapidly. They had made $0.8 million business within one year. The successful starting of the business attracted and received significant venture capital support. In 1999, the company had leased the warehouse and the orders were packed and shipped by UPS to the customers all over the United States.
Main Problem of SportStuff.com
In January 2000, Sanjay Gupta and his management team evaluated the performance of the company in 1999. They estimated that the growth rate of the business will be about 80 percent per year in the following three years. Although the company were pleased with the growth in sales and profit, the increasing cost would be greater than the revenue if the supply chain network design didn’t change simultaneously. If the supply chain network design stayed the same, the company would lose sales without the appropriate capability. Also, in order to meet the increasing demand, the cost will increase at the same time, like laboring cost, inventory cost, transportation cost and fixed facility cost. Therefore, the supply chain network design of sportstuff.com has to change to meet the demand. The allocation of warehouse will involve different cost and affect