Case discussion Questions: 1. Some assumptions: All 10 styles in sample problem are made in Hong Kong.

ng. Wallys initial production commitment must be >= 10000 units. All styles ha e same price!unit cost.

As per the probability distribution cur e gi en in the case" the span is o er # $ %& 'here # is the mean" & is the standard de . and % is the (actor o( spread. )nitial demand gi en is *0000 and there(ore" during initial phase o( production" demand is #+%&. ,otal demand is 1000- 'ith % = 1.0.. Here" ) ha e replaced the negati e demand 'ith /ero. 0lease (ind the calculations in the e1cel sheet attached" the hyperlin% o( 'hich is gi en belo'. Calculations_SportsObermeyer.xlsx

*. 2ead time (or 3bermeyers par%a components = min 4lead times5 = 16 days. 7inimum 3rder 8uantity = .00 units in Hong Kong and 1*00 in 9hina. ,he order o( assignment is ris%y 'hen the e1pected demand calculated is more than the minimum order :uantity 'hich is .00 in this case. Thus it is risky in case of Gail, ntice, !ssault, lectra, Seduced, !nita, "aphne. 2et us :uanti(y the ris%s in ol ed in each o( these: 0robability 4demand>minimum order :uantity5 = 0robability 4stoc% out5 0robability 4demand;minimum order :uantity5 = 0robability 4o er stoc%ed5 = 1+ 0robability 4stoc% out5 0lease see the calculations (or probabilities in Calculations_SportsObermeyer.xlsx Here" ) ha e ta%en a normal distribution 'ith mean as .00 = minimum order :uantity

,here(ore" area greater than .00 shall be probability o( stoc% out and ice ersa.

<. =o'" i( all 10 samples are made in 9hina" the minimum order :uantity changes to 1*00. Here" ) ha e ta%en a normal distribution 'ith mean as 1*00 = minimum order :uantity ,here(ore" area greater than 1*00 shall be probability o( stoc% out and ice ersa. ) ha e summed arious probabilities o( stoc% out in 9hina as 'ell as Hong Kong. Seeing arious probabilities" the stoc% out ris% is much more in Hong Kong than 9hina. #isk is maximum $ith !ssault, lectra, Seduced and !nita. 0robability o( stoc%ing out or o er+stoc%ing is same as the ris% associated 'ith the in entory i.e. 'hether it gets (inished early or not and its relationship 'ith demand.

>. ,o impro e the per(ormance" some o( the operational changes recommended are: a. )mpro e operations in Hong Kong and 9hina both by decreasing stoc% out ris% in Hong Kong. Wage rate must be impro ed in Hong Kong and young 'or%(orce must be encouraged 'ith lesser unemployment probabilities. 7ore :uality and cleanliness consciousness must be in(used 'ithin 9hinese 'or%ers. ,rainings re:uirements 'ere also needed in 9hina. 3perations (rom 9hina might be increased but not at the ris% o( trade relations (rom ?S. b. @or some o( the par%a components li%e insulation or lining (abric" lead time might be reduced since their usage and minimums are too lo' 'hile lead times are high. c. 9ut do'n on some o( the operations in Hong Kong and start assembling more o( the components o( par%a in 9hina due to lo'er cost there and a di((erence o( A-.<. But the materials need to be e1ported :uic%er due to :uota restrictions. As long as the :uota restriction 'as not reached" 9hina could be used as a (a orable destination (or assembling. d. )mpro ement o( (orecasting methods 'as increasingly needed since o er+stoc%ing as 'ell as stoc%+out" both" 'ere the problems being obser ed. Celphi method" time series analysis 'ith 'eighted a erages" e1ponential smoothing and (orecast errors could be incorporated in the techni:ues. e. 2ead times might be reduced by using air as a transport alternati eD ho'e er an additional A<.. might be incurred 'ith this alternati e. Eudging the cost" air might not be a good option and thus stoc% must be %ept in reser oir and must be trans(erred by (reight.

6. )n the short term" Wally might thin% o( continuing to source 60F both in Hong Kong and 9hina ho'e er in long term more material!par%as might be sourced (rom 9hina due to lo'er costs and a 'ell established net'or% there. %ed&e strate&ies might be use(ul in this case since any loss (rom cost angles in 9hina can be o((set by bene(its (rom Hong Kong. Also" in ice ersa scenario" any loss in Hong Kong (rom under stoc%ing etc. might be o((set by 9hinese stoc%s. Since" there are speculations o( 9hinese trade relations 'ith ?S" 'hole o( the business must not be shi(ted to 9hina" instead a trade+o(( bet'een both is pre(erred. 7inimum 3rder :uantity" being more in 9hina" a better (orecast 'as needed there.