Sport Obermeyer Ltd.
To: Wally Obermeyer
From: 341 Consulting Group
Re: Production Process
Sport Obermeyer Ltd has quite a few problems at the moment that stem from a lack of streamlining of its operations. One of the problems that the skiwear manufacturer currently faces is demand uncertainty and how to measure it considering the disparate forecasts the buying committee members have come up with. In addition, the long lead-times for the production process makes forecasting even more difficult. The second issue for Sport Obermeyer is determining how to allocate production between the factories in Hong Kong and China.
Conclusion and Recommendation
Inaccurate forecasting is a major problem facing Sport Obermeyer, which has been addressed in Appendices A and B. Appendix A shows how much should be produced in Hong Kong given the assumption that there is no limit to the capacity; however, we have been asked to comment only on the initial order quantity, and not the reorder quantity. In keeping with this constraint, and using the forecasts given by all the committee members, we believe that Appendix B is an accurate representation of the amount of each style that should be produced in Hong Kong. It should be noted that this is only a short-term solution to the problem and the model itself must be looked at. For more consistent, accurate forecasts, a weighted average method should be used to give those committee members who have been most accurate in the past more importance, instead of using a simple moving average.
As long lead times contribute to the difficulty in forecasting demand, Sport Obermeyer should attempt to reduce lead times for its production. One of the root issues causing the length of lead time is the number of SKUs, as well as the variety of components used in their production. Simplifying the product line would involve stopping production of those products with the least demand, reducing suppliers as well as altering...
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