Dealing With A Ski Apparel Company

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This case is dealing with a ski apparel company called Sport Obermeyer. They are trying to figure out how much and where to produce their 1993-1994 line. However they seem to be running into a problem, they don’t know how much they should produce. They don’t want to produce too much and have left overs that they have to sell at a discounted rate. They also don’t want to not have enough for the demand. Another question was where should they do most of their production. In Hong Kong, workers were 50% faster than workers in China. Hong Kong also put their workers trained in many different areas. It would take 40 workers in China to complete a line versus 10. On the other hand, China’s minimum wage was much lower, $.16 per hour in US dollars. While Hong Kong minimum wage was $3.84 per hour.
The first production order that Wally will make for the 93-94 season should only have 4 items. This is due to the fact they don’t have enough data to accurately forecast demand, thus they should order the items that have the lowest potential loss per parka. This production plan is conservative in the sense that they will not lose a significant amount on those units that will be produced for the initial order. However this plan does involve risk because there will be a possibility of lost sales on the higher priced items, these items also tended to be the most uncertain in demand. After the Las Vegas trade show Obermeyer will have much more data to forecast demand with greater

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