From an operational point of view.

1. Sports Obermeyer
Presented by
Group 4
Ruchi Sao (13PGP048)
Geeta Hansdah (13PGP079)
Trisha Gajbhiye (13PGP116)
Bhavana Ziradkar (13PGP118)
Sai Shilpa (13PGP124)

2. Introduction
• Sports Obermeyer was founded in 1947 by Klaus Obermeyer.
• It is a Fashion skiwear manufacturer. It offers wide variety of ski apparels such as
parka, vest, , ski suits, sweaters etc.
• The company estimated US $32.8 million sales for year 1992.
• It had 45% market share in children’s skiwear and 11% in adult skiwear.
• Obersport is joint venture betweent RaymondTse and Klaus Obermeyer.
• It contributes to major production of Sports Obermeyer in Hong Kong and China.

3. Company Structure
Obersport
Sports
Obermeyer
Ski Retail
Stores
Direct Mall
Retailers
Departmental
Stores

4. Question 1
• Using the sample data given in Exhibit 10, make a recommendation for how
many units of each styleWally Obermeyer should order during the initial
phase of production. Assume that all ten styles in the sample problem are
made in Hong Kong, and that Obermeyer's initial production commitment
must be at least 10,000 units.

5. Answer 1
• As perWally’s estimation:
• Obermeyer earned 24% of wholesale price on each parka it sold.
• Approximated loss in each unsold parka was 8% of wholesale price.
• Stock out = 1-α (α is service level).
• Assuming : Probability of meeting the demand during lead time =
Probability of earning profit.
• 𝛼 = 𝑃𝑟𝑜𝑓𝑖𝑡 /(𝑃𝑟𝑜𝑓𝑖𝑡 + 𝑅𝑖𝑠𝑘)

6. Contd…
• α = 24/(24+8) = .75
• 1- α = .25 (Probability of stock out)
• At degree of freedom infinity and at .75
the value of t = .674 i.e. value of Z.
t distribution

7. Required Quantity 10000
Z value 0.6745
Style
Average
Forecast
2 * Standard deviation
Production
Quantity X= ϑ + Zσ
Production
Quantity
Order to HK
Gail 1017 388 1278.7 485.1 600
Isis 1042 646 1477.7 560.6 600
Entice 1358 496 1692.6 642.1 642.1
Assault 2525 680 2983.7 1131.9 1131.9
Teri 1100 762 1614.0 612.3 612.3
Electra 2150 807 2694.3 1022.1 1022.1
Stepha
nie 1113 1048 1819.9 690.4 690.4
Seduce
d 4017 1113 4767.7 1808.7 1808.7
Anita 3296 2094 4708.4 1786.2 1786.2
Daphne 2383 1394 3323.3 1260.7 1260.7
Total 20000 26360.2 10000

8. Question 2
• What Operational changes would you recommend toWally to improve
performance?

9. Answer 2
Recommendation 1 :
• As per exhibit 10, standard deviation
in the forecasting method is high.
• Weighted average forecasting
method can be used to increase
forecasting accuracy.
Recommendation 2 :
• Reduce lead time by developing supplier
network.
• Increasing the proximity between the
supplier and manufacturing plant.

10. Contd…
Recommendation 3
• Increase the efficiency of Chinese workers
by providing training.
• Provision of cross functional training to
Chinese workers.
Recommendation 4
• Non standard zippers from Japan has lead
time of at least 90 days.
• Reduce the lead time by searching
manufacturers for non standard zippers In
China or Hong Kong.

11. Question 3
• How should Obermeyer management think (both short-term and long-
term) about sourcing in Hong Kong versus China?

12. Answer 3
• On long term perspective , the company can shift its manufacturing base to
Hong Kong based on below points:
• Lead time reduction
• Minimum order quantity reduction
• Increase in efficiency
• No quota constraint like China

13. Thank You