1.

Given the uncertainty associated with player demand, how should Reebok approach
inventory planning for NFL replica jerseys?

Since there is uncertainty with jerseys demand, Reebok should look back at past demand
trends in order to figure out how much inventory to keep on hand at particular points in the
season. In doing this, they will be able to see the growth and shrinkage of demand, helping them
to formulate a production cycle better suited to them and their inventory.

2. What should Reebok’s goal be? Should Reebok minimize inventory at the end of the
season? Or maximize profits? Can Reebok achieve both? What service level should Reebok
provide to its customers?

The goal for Reebok should be to maximize profits while having a low inventory of
embroidered jerseys. If Reebok wants to have excess inventory, they should wait till closer to the
end of the season to increase their blank jerseys. In doing so, it will give them the ability to sell
those during the off season. If Reebok transformed it business model to a pull system, it would
also improve overall operations. In using a pull system, it will help control the flow of raw
material during the manufacturing process. With this, it will help replace the products that have
been sold. This will allow the supply chain to become leaner while reducing its inventory across
the board. In using this model, it will allow the consumers orders to dictate the production
schedule based on the current demand. This way is full proof because of the uncertainty in
forecasting in jerseys sales. Additionally, in using the pull model, it will reduce the amount of
lead time, the amount of work in the pipeline, turnaround time, cycle time, as well as improve
overall cashflow. With Reebok using this model, they will be able to accomplish the goal of
maximizing profits as well as reduce overall inventory. In turn, this will also improve customer
satisfaction, allowing them to meet the high service levels they desire.

3. Are the models in Section 2.2.2 helpful here? What is the cost of underage for a dressed
jersey? What is the cost of overage for a dressed jersey? How might Reebok decide between
dressed jerseys and blank jerseys?

As provided by the case, blank jerseys are $9.50 and a dressed jerseys are $10.90 with an
additional cost of $2.40 because of withholding cost of blank jerseys of 11%. This in turn will
reflect both the capital cost and storage cost of inventory. Therefore, the estimated cost to hold
additional blank Patriots is $1.045 per unit. In using the Indianapolis location for manufacturing,
the current cost per blank is $9.50 in addition to the $2.40 to decorate the jersey totaling at
$11.40. The underage for a dressed jersey will be wholesale price $24.00 minus $10.90 the cost
of dressed jerseys delivered to the Indianapolis manufacturer minus for an underage of $13.90.
The cost of overage for a dressed jersey will be $10.90 minus $7.00 discounted price for a
dressed overage of $3.90. The underage for a blank jersey will be $24.00 wholesale price minus
$9.50 blank jersey cost minus $2.40 decorating cost of blank jersey, ending with an underage of
$12.10. The overage of blank jerseys is the $9.50 blank jersey times 11% rebook holding cost for
an overage of $1.045. wholesale price minus dressed jersey cost of $10.90 for an overage of
$13.10. The dressed jerseys finished in Indianapolis facilities will have an overage of $12.10.
With the previous information in mind, Reebok should consider utilizing the Indianapolis
manufacturing plant if they are able to keep up with demand. If they are able to do this, it will be
more cost effective for them. The reason why it will be more cost effective is because of not
having to sell the overage at a discounted price to reduce inventory.

4. Using the forecast for the New England Patriots, what is the optimal quantity to order
for each player? For blank jerseys? What profit do you expect for Reebok? How much and
what type of inventory is expected to be leftover at the end of the season? What service
level?

In creating a forecast for the New England Patriots, they will need to order 111,853
jerseys with the expectation of having 26,993 left over. The profit per unit for a dressed jersey is
$13.90 and $12.10 for blank jerseys. In ordering 54,807 dressed jerseys, the order will profit
$663,164.70 and $363,641.3 for the order of 30,053 blank jerseys. This will leave an estimated
26,993 left over for an inventory cost of $28,207. The final calculation comes to $663,164.70 +
($363,641.30-26,993.00) for a total of $999,813.00.
With Reebok using the previous information for its forecast, this will help to improve its
service level. In having a 92% probability of having product available, this will help with
meeting customer demand as well as decreasing the chances of being out of stock of a particular
unit. Schalit and Vermorel (2014) explain that the cycle service level is the expected probability
that there will not be a stock-out during the manufacturing and re-stocking cycle. Therefore, this
also shows the probability of not losing sales. They also go onto say that the duration of the cycle
is dependent on the amount of lead time. In order to reduce overall costs and improve the current
service levels, Reebok should consider more interactions is particular parts of the supply chain
process (Simchi-Levi et al., 2008). To the customers who preferred variety of choices, the
adjustments of service levels, and prices, Rebook was in the position to gain the competitive
advantage over other competitors (Liu et al., 2019).

References
Liu, Z., Feng, J., & Liu, B. (2019). Pricing and service level decisions under a sharing product
and consumers’ variety-seeking behavior. Sustainability, 11(24), 6951.
Schalit, S., & Vermorel, J. (2014). Service level definition. https://www. lokad. com/service-
level-definition
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., & Shankar, R. (2008). Designing and managing
the supply chain: concepts, strategies and case studies. Tata McGraw-Hill Education.