Sport Obermeyer – Case Analysis

Part 1: Executive Summary

Obermeyer, Ltd, a fashion skiwear manufacturer, is facing some challenges in forecasting demand for next year’s line of fashion. Delayed market information and long lead time are the major reasons that could cause inaccurate forecast, which would make the company suffer from financial consequence such as loss of sale and price cut down. Production allocation between china and Hong Kong with respect to their capacity, strength and weakness is also crucial to the company. Later in the analysis will lead to a discussion of different techniques to assess risk of inaccurate forecasts associated with different style in the sample problem. Therefore determine which style should be placed in to the first production order.

Part 2: Issues Identification

Immediate Issue

It’s November 1992 and the company is starting to make appropriate production commitments for its 1993 – 1994 season.

Customer ordering cycle time starts from March when 80% retailers’ initial orders placed, ends in August when first order received. However, supply cycle started from first production order placement is 4 months longer than customer ordering cycle time. This indicates a long lead time for production that could be a great concern to Obermeyer.

Order Cycle VS Supply Cycle: 1992

Customer ordering cycle:

Supply Cycle:

The immediate task is to figure out the correct order quantities and manufacturing source for the upcoming 1993 to 1994 selling season. A commitment of 10,000 units initial order has to be made by November.

This immediate issue is just a symptom of the underlining, systemic issues at Sport Obermeyer, which are listed below:

Systemic Issues

Limited Production Capacity

Long Lead Times

Uncertain Demand

Large Lot Sizes / MOQ (Minimum Order Quantity)

Part 3: Environmental & Root Cause Analysis

Qualitative Analysis

The company’s design-and sales cycle was relatively straightforward: design the product, make...