Sport Obermeyer: Economic Production Quantity

2855 Words Sep 3rd, 2009 12 Pages
Analysis

The Company
Sport Obermeyer (SO), Ltd. Is a high end fashion design and merchandizing company based in Aspen Colorado. It was, founded by Klaus Obermeyer, a German ski instructor. SO aims to provide U.S skiers with the samehigh quality ski wear that is protective and , stylish and comparable in standards to the clothing and equipment available in Germany. Over the years, the company developed grew into a dominant competitor force in the United States skiwear market with estimated sales of $32.8 million in 1992. The company held a commanding 45% market share of the children’s skiwear and 11% market share of the adult skiwear market. SO competesing with Columbia Sportswear which held 23% market share in this the adult skiwear
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Based on these ideas, the teams came up with a concept for their prototypes, which were later prototyped with real material and demonstrated to retailers. Concurrent with sample production, Obersport determined fabric and component requirements for Obermeyer’s initial production order.
Issues facing Obermeyer
Some of the issues that Obermeyer facesd are:
1. Measuring demand uncertainty from disparate forecasts
2. Allocating production between factories in Hong Kong and China, determining how much of each product to be made in each factory.
3. Long lead times for orders.
4. Little of no feedback from market – the only little feedback that they get is at trade shows in Las Vegas (American Styles) and the in Munich (for European Styles).
5. Inaccurate forecasts resulting in loss of sales and deep discounts of excess left over and out of fashion inventory.
6. United States Import Quotas forcing for early delivery from Chinese factoriesin the season.
Recommendations

1. Effective Supply Chain management
Looking at the order cycle of Obermeyer, it takes nearly two years before the product hits the retail stores. The main issues are operating in an environment with long lead times and the inability to obtain timely market feedback.
2. Improving Operational Efficiencies
One of the big operational inefficiencies is in material management large lead times of the principal and more expensive

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