SCM – Case

Group – 2

Navya Mohanka – PGP/25/157 | Mohnish Jaiswal - PGPLSM/02/027 | Ankit Maurice Beck-

PGP/25/319 | Harmeet Kapoor- PGP/25/026

Q1. Using sample data given in the table “Sample buying Committee Forecasts”, make a
recommendation for how many units of each style Wally should make during the initial
phase of production. Assume all 10 styles are made in Hong Kong and that Wally’s initial
commitment must be at least 10,000 units. Ignore price differences among styles in your
initial analysis.

With Excel's Goal Seek and the doubled Buying Committee standard deviation as inputs, the
order quantity equation Qk=+k is used to determine the best order quantities for each style
without taking the minimum order quantity into account order specifications are -

Style Q_k

Gail 605

Isis 356

Entice 833

Assault 1803

Teri 292
 Electra 1294

Stephanie 1

Seduced 2896

Anita 1075

Daphne 905

Totals 10000

The production totals of sis, Teri, and Stephanie fall below the minimum order amount of 600.
The production figures displayed below are attained by converting quantities less than 600 to
600.

Style Q_K

Gail 605

Isis 600

Entice 833

Assault 1803
 Teri 600

Electra 1294

Stephanie 600

Seduced 2836

Anita 1075

Daphane 905

Totals 11151

On the other hand, the critical ratio is

(Cu )/ (Cu+Co) = (24% ) /( 24%+8%) =0.75

Optimal z statistic is 0.67 (=NORMSINV (0.75) in EXCEL). Using Q=μ+z×σ, the optimal order
quantities are:

Style Q_k

Gail 1279

Isis 1478
 Entice 1693

Assault 2984

Teri 1614

Electra 2695

Stephanie 1820

Seduced 4768

Anita 4709

Daphne 3324

Totals 26364

The consequence is as follows: (Each style should be manufactured in between the least and
the most during the initial manufacturing stage)
Style Least Most

Gail 605 1279

Isis 600 1478

Entice 833 1693

Assault 1803 2984

Teri 600 1614

Electra 1294 2695

Stephanie 600 1820

Seduced 2896 4768

Anita 1075 4709

Daphne 905 3324

Totals 11151 26364

Answer 2.

In this situation, the coefficient of variation is one of the more accurate ways to measure the level of risk
that is connected with the ordering method (CV).
The coefficient of variation (CV) is defined as the standard deviation to the predicted mean ratio.
It shows the amount of volatility and variance in the data for each individual unit of the mean.
On the other hand, in this particular situation, the CV would be defined as the volatility of each of the
numerous variants of parkas in terms of a single unit of that design.
The demand variability or the ordering policy risk would be determined based on this.
The more volatile the market is, the higher the level of certainty and precision the company would need to
have in order to forecast customer demand for the 1993-1994 season.
According to the information provided in the case, during the second section of the Las Vegas trade show
around eighty percent of the company's merchants will place orders.
After calculating the CV for each parka and displaying the results in exhibit 2, we can see that Isis, Teri,
Stephanie, Anita, and Daphne have the most volatility (risk) within their predicted demand. This is proven
by the fact that Isis has the highest value.
As a consequence of this, the company ought to set aside future capacity for all of these things because
there is a greater degree of volatility associated with them.
In the event that there is an increase in demand in the years to come, which is the more likely scenario, the
company will have sufficient buffer stock to meet that demand

Answer 3.
.

In light of the presented information, we are able to classify the product into one of two categories:
products with a high level of prediction accuracy and goods with a low level of prediction accuracy.
As a direct consequence of this, Sport Obermeyer ought to use a different approach to the management of
the supply chain for the two distinct types of commodities.
It is possible that it will place an order for the quantity based on the sales forecast for items that have a
high degree of predictability.
As can be seen in exhibit 5, the forecast accuracy improves as more information is gathered, so it is
possible to place an initial order for a low quantity of an item for which the accuracy of the forecast is
poor and then place a subsequent order for the correct quantity after some real sales have occurred.
However, higher costs will be incurred due to the fact that this supplier and distribution require shorter
lead times in order to give a speedier response.
To improve their responsiveness, businesses should gather real-time data from their points of sale by
employing an electronic data interchange system. This will enable them to react more swiftly to shifts in
the actual demand for their products or services.
As a direct consequence of this, both the flow of information and the accuracy of forecasts will increase.
They may also have control over the quantities of inventory held by merchants, which allows them to
acquire more accurate and timely data, and thus, a better reaction.
They could experiment with changing their supply chain so that it produces items "to order" rather than
"to stock."
This will result in an increase in the amount of time that customers are required to wait in order to receive
the goods they desire. This can be avoided, however, by increasing the level of customization offered to
customers to the point where they are willing to wait longer for the products they want.
Postponement is an option for usage by Sport Obermeyer in order to cut down on lead time and make it
possible for later implementation of activities that add variety to the product.
On the other hand, the cost of the components that contribute to diversity need to be lower than the cost of
the product in its generic form.
They might decide to go with backward integration or build suppliers adjacent to the assembly site in
order to cut down on the lead time their suppliers require and boost their responsiveness.
They might use a third-party logistics company to handle distribution if they want to avoid having to wait
for full truck loads and if they want to deliver items to stores with shorter lead times.
The operations of Sport Obermeyer can be improved in a number of ways; some of these include: supply
chain segmentation based on the accuracy of the goods' forecast; reducing the lead time of suppliers by
using local vendors or backward integration; postponement to reduce the variability of lead time;
electronic data interchange to obtain point of sale data; vendor managed inventory for retailers; and the
use of third party logistics.

Answer 4.

This product features high product design innovation but low product innovation in the production
process. Due to the high degree of demand unpredictability in this industry and the changing nature of
market trends, it is not profitable to store inventories. Since Company’s products are seasonal, the time
horizon that the company has is more than sufficient. Company’s products require a dynamic supply chain
to adjust to market trends. Because Obersport's suppliers have long lead times, Sport Obermeyer also has
long lead times. Numerous parts, such as buckles, snaps, zippers, buttons, pull strings, and D-rings, are
used in the production process. In this supply chain, there are numerous providers and hence more elastic
and responsive supply chain has to be built.

Recommendations to enhance the supply chain by enhancing its responsiveness.

● Reduce the amount of lead time in the production process.

● Finding new suppliers for manufacturers, expanding the pool of available suppliers, and
strengthening relationships with those suppliers.
● Establish a shared platform for sourcing so that suppliers and manufacturers can communicate
easily, which will hasten the procurement process.
● Postponing the dying process and adding components like snaps and zippers can improve the lead
time with a consistent production method. Training Chinese workers to work more efficiently will
lower the lead time involved in this channel.
● Making a multi-layer channel for production, one using Chinese manufacturers and the other
using Hong Kong manufacturers, which can be used to meet the demand of different order cycles.
● Chinese manufacturers should preferably be used for initial orders because they have a low
minimum order quantity and high lead times. Hong Kong manufacturers can be employed for the
replenishment order as they are highly efficient and have a short lead time.

Answer 5.
The Advantages and Disadvantages of manufacturing in China and HongKong would be:

Advantages:

HongKong:
Faster Production,Highly Flexible,Reliable and Better Quality, and Less Repair Rate

Where as for China:

Lower Labor Cost, Larger Lot Sizes, and Longer Working Hours

Disadvantages:

HongKong:
Smaller Lot Sizes, Higher Labor Cost, and Slow Production

China:
Not so Reliable/ Lower Quality, Slow Production, and Higher Repair Rate

Considering the advantages and disadvantages of Hong Kong and China Wally should view Hong Kong
as a short-term objective and China as a long-term aim. Hong Kong is ideal for sample manufacturing,
small lot size orders (under 1,200 units), and giving the flexibility and speedier reaction time required to
respond to unexpected market changes. It is more suited for finding high-risk styles. China is better suited
for sourcing lower-risk styles and purchases with greater lot quantities (over 1,200 units). A longer-term
plan should involve leveraging relationships via Obersport Ltd. and Alpine Ltd. to enhance training,
quality control, and manufacturing procedures for factories in China in order to decrease risks while
benefiting from reduced pricing. Hong Pros of Kong Cons of Hong Kong China Advantages and
Disadvantages Workforce with Skill Increased Labor Costs Reduced Labor Costs Flexible Production
with a Less Skilled Workforce Future Workforce Scarcity a large pool of workers Less Versatile Reaction
Increased Productivity Slower Manufacturing High-Quality Results Quality Risks Have Increased
Reduced Minimum Orders Increased Minimum Orders Improved US Trade Relations Risks to US Trade
Relations.