Only 30% of higher risk items were ordered to be produced in the first production cycle. Once the risk levels of each item were determined, the quantities of items to be produced in first and second production cycles could be calculated with least risk.ħ0% of the entire sales forecast for the lower risk items were ordered to be produced. Every value below 0.2 were considered to be among the lower risk items and all the items above COV value of 0.2 were considered to be of higher risks.
The COV values were broadly divided into two levels, the low risk group and the high risk group.
Analysis From the sales predictions that the six managers forecasted, a coefficient of variation (COV) was determined, which indicated the level of spread of the forecasted data. Organization challenges along with competition from competitor companies were major challenges the company had faced. The company had supplies of raw materials from various countries which resulted in delayed production time. Another challenge the company faced was the larger lead time. There was difference in quality and labor rate at China and Hong Kong which made allocation decision more difficult. Although Obermeyer had 1/3 of Parka production in China for 1992, this year the organization insisted on increasing the sales to half. Second challenge the company had faced was to allocate production between Hong Kong and China.
The two major factors that made this task more difficult was the increase in product variety and intense competition in market. The question currently facing management at Sport Obermeyer is to determine the.Ĭhallenges Inaccurate forecasts of retailer demand has become a major issue at Obermeyer. Is a ski apparel company facing a dilemma in ordering production of its products. Planning this production for products with short life. Case Solution, The case describes operations for design and marketing of ski apparel company and its partner offer.
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