SOcase - MBAC6080 Decision Modeling and Applications Thomas...

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1 MBAC6080 Thomas Vossen Assistant professor of Operations Management Leeds School of Business University of Colorado Boulder, CO 80309-0419 Decision Modeling and Applications
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Lecture 9, 3-12-2008 2 MBAC6080 Sport Obermeyer Case Identification of major issues in the supply chain. Recommendation on ordering units of each style during initial phase of production. (using sample data in Exhibit 10; assume 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.) Recommendation of operational changes to lower risk and improve performance. How should Obermeyer management think (both short-term and long-term) about sourcing in Hong Kong vs. China?
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Lecture 9, 3-12-2008 3 MBAC6080 Sport Obermeyer, Ltd Product lines: Parkas Pants Ski apparel in general Product variety within a line: 5 sizes per style-color 6 colors per style 15 styles Problems with proliferating product variety Production sources: HK vs. China
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Lecture 9, 3-12-2008 4 MBAC6080 The Supply Chain Lining  Fabric Shell  Fabric Insulation  Materials Snaps Zippers Others Cut/Sew Distribution  Center Retailers Textile Suppliers Obermeyer Obersport Retailer s
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Lecture 9, 3-12-2008 5 MBAC6080 What makes it difficult for Sport Obermeyer to be effective in managing its supply chain? Long lead times high inventory Global supply chain (distance / time) Early commitment Large lot sizes Short life cycle Uncertain demand Perishable product: one season Historic data useless Late demand signal Limited capacity
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Lecture 9, 3-12-2008 6 MBAC6080 Order planning cycle 93-94 line Time Obermeyer Obersport Feb-92 Design begins Jul-92 Sketches done Order fabric Sep-92 Design finalized Prototype production Nov-92 1st order placed Start work M ar-93 Las Vegas Full scale production Jun-93 M ore retail orders Ship to US Sep-93 Selling season
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Lecture 9, 3-12-2008 7 MBAC6080 Time Line
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Lecture 9, 3-12-2008 8 MBAC6080 Speculative vs. Reactive Capacity Initial Forecast Las Vegas  Orders Speculative  Production Capacity Reactive   Production Capacity
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Lecture 9, 3-12-2008 9 MBAC6080 Scenario Outcome Excess inventory Stock out End of Season Problem •Loss of 8%/unit ~ $9 Limited capacity effects (could have  used that capacity to produce  something that stocked out •Loss of profit (24%/unit) ~ $27
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SOcase - MBAC6080 Decision Modeling and Applications Thomas...

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