Sport Obermeyer

Part 1: Executive Summary

Sport 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. The new invested factory in China offers a great financial advantage, which is low cost for production, however, also raised concerns regarding to productivity, quality, lack of control by Obermeyer, trading risk between China and US. To move 100% production to China is not going to eliminate the risk of inaccurate forecasts and production allocation. To reduce the risk, the company could try to reduce production cycle time, reduce or replace supplier for shorter lead time, acquire quicker and more accurate market information. The best alternative for future production allocation is to move 70% of the production to China in order to maintain the financial advantage. Remaining 30% production could be done in Hong Kong, which offers more flexibility in capacity.

Part 3: Immediate Issue

The current problem is related to the difficulty that the company is facing in balancing the order commitments we need to make against the risk associated with any inaccuracy in our demand forecasts. There has been great difficulty in matching our supply with consumer demands, the problem is amplified by the fact that our cycle time from product design to delivery to the customer (retailers) is about 1.5 years. This exaggerated...