Case Study

Ace Sports
• Ace Sports was established in the 1970s
to manufacture sportswear and
equipment.
• Because of stiff competition, the company
initially generated only nominal profits.
• After 1990s, the campaign regarding
“healthy lifestyle” began gaining ground.
• The sales of the company started rising
steadily.
 Ace Sports

• Currently, Ace Sports consists of 5 departments

headed by VPs who report to the president of
the company.
• These five departments are Operations, finance,
marketing, logistics, and administration.
• The president employs a democratic style of
management, where each person has a right to
comment on and recommend improvements.
• This, the president believes, will help the
departments to work cohesively and assist each
other.
 Ace Sports
• Ace Sports has only one plant. One
hundred employees work at this plant.
• The raw materials are stored in the
company’s stores which is situated near
the factory.
• Packed finished goods are transferred to a
public warehouse situated about 100 km
from the factory. From there, the products
are delivered directly to the RDCs.
 Ace Sports
• Ace Sports distributes its products to four RDCs.
• One of the four RDCs, in Mumbai, holds about 50% of the
market .
• Recently, they have informed the President, Mr. Rahul, that
there are many stock out problems that has resulted into
poor customer service levels and our customers are moving
to competitors.
• Recently, Ace Sports had launched many new sportswear
and had spent a lot of money on advertising, which had
generated very good demand.
• Mr. Rahul has realized that this will threaten Ace Sports and
will dramatically affect its sales.
• Mr. Rahul called a meeting with his VPs to discuss his
concern.
 Discussion
• President : This shortage situation is terrible. whenever business
gets good , we run out of our products and our customer service is
lousy.
• VP Operations: I will tell you when . When we get a wrong forecast
from our sales dept.
• VP Sales (Interrupting): Wait a min, Many times we have forecasted
accurately.
• VP Operations : …but we got a wrong forecast . By now it was too
late. Now we cant do anything.
• VP Sales: Many times when we have forecasted accurately , we
had similar stock out situation.
• President : I think we have to work on Materials Requirement
Planning.
• VP Finance : I’d like to be in one of these discussions. We have
been burned more than once by building inventories for business
upturn that doesn’t happen. Then we get stuck with tons of inventory
and ran out of cash.
 Ace Sports
• How to deal with this problem?
• What are different methods of forecasting?
• What is MRP?
• What is the logic of MRP?
• What are the inputs and outputs of MRP?