Sports ObermeyerPresented byGroup 4Ruchi Sao (13PGP048)Geeta Hansdah (13PGP079)Trisha Gajbhiye (13PGP116)Bhavana Ziradkar (13PGP118)Sai Shilpa (13PGP124)

Introduction• Sports Obermeyer was founded in 1947 by Klaus Obermeyer.• It is a Fashion skiwear manufacturer. It offers wide variety of ski apparels

such as parka, vest, , ski suits, sweaters etc.• The company estimated US $32.8 million sales for year 1992.• It had 45% market share in children’s skiwear and 11% in adult skiwear.• Obersport is joint venture betweent Raymond Tse and Klaus Obermeyer.• It contributes to major production of Sports Obermeyer in Hong Kong and

China.

Company StructureObersport

Sports Obermeyer

Ski Retail Stores

Direct Mall Retailers

Departmental Stores

Question 1

• Using the sample data given in Exhibit 10, make a recommendation for how many units of each style Wally Obermeyer should order during the initial phase of production. Assume that 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.

Answer 1• As per Wally’s estimation:• Obermeyer earned 24% of wholesale price on each parka it sold.• Approximated loss in each unsold parka was 8% of wholesale price.

• Stock out = 1-α (α is service level).• Assuming : Probability of meeting the demand during lead

time = Probability of earning profit.

Contd…

• α = 24/(24+8) = .75• 1- α = .25 (Probability of stock

out)• At degree of freedom infinity and

at .75 the value of t = .674 i.e. value of Z.

t distribution

Required Quantity 10000Z value 0.6745

Style Average Forecast

2 * Standard deviation

Production Quantity X= ϑ + Zσ

Production Quantity

Order to HK

Gail 1017 388 1278.7 485.1 600Isis 1042 646 1477.7 560.6 600Entice 1358 496 1692.6 642.1 642.1Assault 2525 680 2983.7 1131.9 1131.9Teri 1100 762 1614.0 612.3 612.3Electra 2150 807 2694.3 1022.1 1022.1Stephanie 1113 1048 1819.9 690.4 690.4Seduced 4017 1113 4767.7 1808.7 1808.7Anita 3296 2094 4708.4 1786.2 1786.2Daphne 2383 1394 3323.3 1260.7 1260.7Total 20000   26360.2 10000

Question 2

• What Operational changes would you recommend to Wally to improve performance?

Answer 2

Recommendation 1 :• As per exhibit 10, standard

deviation in the forecasting method is high.

• Weighted average forecasting method can be used to increase forecasting accuracy.

Recommendation 2 :• Reduce lead time by developing

supplier network.• Increasing the proximity between

the supplier and manufacturing plant.

Contd…

Recommendation 3• Increase the efficiency of Chinese

workers by providing training.• Provision of cross functional

training to Chinese workers.

Recommendation 4• Non standard zippers from Japan

has lead time of at least 90 days.• Reduce the lead time by

searching manufacturers for non standard zippers In China or Hong Kong.

Question 3

• How should Obermeyer management think (both short-term and long-term) about sourcing in Hong Kong versus China?

Answer 3

• On long term perspective , the company can shift its manufacturing base to Hong Kong based on below points:• Lead time reduction• Minimum order quantity reduction• Increase in efficiency• No quota constraint like China

Thank You