Sport Obermeyer Case

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Managing risk in global operations under highly uncertain demand requires a heavy reliance on accurate forecasting. Sport Obermeyer, Ltd is in the business of manufacturing skiwear which includes short life cycle items due to their short selling season and dependence on trends in fashion. Each year Sport Obermeyer is challenged with matching supply to demand because production must be forecasted more than one year ahead of the expected selling season. These forecasts determine how much Sport Obermeyer should produce, but still entail an element of risk. Labor restrictions and production lead times that are significantly longer than the product’s selling season make accurate forecasting of trends crucial to Sport Obermeyer’s business. This…show more content…
The Issues
The current problem that Sport Obermeyer is facing is specifically related to the difficulty that the company is facing in balancing the order commitments it needs to make against the risk associated with any inaccuracy in its demand forecasts. Previously, Sport Obermeyer did not have to worry about these types of issues because there was ample production capacity to delay producing until after firm sales orders were received from the retailers. Now that the brand was growing, limited production capacity meant that manufacturing schedules had to be built, at least initially, off of forecasted demand figures. As mentioned above, both over and under-production carried costs that could harm the firm. Figuring out the correct order quantities and sourcing for this upcoming selling season was the immediate short-term goal.

From this overarching problem we can distill several major issues that need to be addressed in the long-term. The first was the need to increase production capacity during the months directly prior to the selling season. Second, there was a specific need to decrease raw material lead times, whether through standardization of process and manufacturing components or pushing the differentiation of raw materials closer towards final assembly. Finally, Sport Obermeyer needed to find a way to build more accurate forecasts for the future.

The Sample Scenario
The table below lists 10 different items that Sport Obermeyer will produce for the

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