Annisa Nurrachman, Anindhitta Chandriana, Arya Perdana

Operation & Supply Chain Management

Mei 19th, 2011
---------------------------------------------------------------------------------------------------

Sport OberMeyer
OberSport Ltd. was joint venture by Klaus Obermeyer and Raymond Tse in 1985, in order to
organize the production Sport Obermeyer products specifically in eastern area. In 1989, Walley
Obermeyer became vice president of Sport Obermeyer. The sales of Sport Ober meyer in 1992,
estimated of $32.8 million which consisting of 45% share of the children's skiwear market and 11%
share of the adult skiwear market.

General analysis of Sport Obermeyer Ltd:

 the current existing production is about 200,000 units annually
 the monthly capacity: 30,000 units
 the output in Hong Kong is 19 parkas / person, and in China is 12 parkas / person
 the minimum order quantity for the same style, in Hong Kong is 600 and in China is 1200
 the total production cost in Hong Kong is 109.98, and in China is 94.60

Factors taken into account in forecasting are past demand, current styles and color, orders from
retailers, based on current data and experiences. Weak forecast leads to two potential problems:
 Having too much styles and colors items in inventory – excess products that force Obermeyer
either to hold unsold items or sell with discounted rates
 Not having enough inventory for the demanded styles and colors – it will dissatisfying
customers

The issues addressed in here:

 As we have seen it is difficult to
predict demand according to exhibit 5. the number of items that should be ordered during
initial phase of production Obermeyer has problem when they were facing unpredictable
demand in certain time, then the capacity of production became limited afterwards.
◦ parka A → initial forecast was 2500 units, while the actual season sales were only 510 units.
There was the mistake in the initial estimation. The new forecast, incorporating demand was
improved to 575 units.

how Sport Obermeyer could improve its forecasting method and achieve dynamic manufacturing
capability to decreasing ending inventory, being more competitive in the industry, and of course
increasing profit

We recommend:
◦ Wally Obermeyer should be carefully to set the initial order. He should consider the risk of
overestimating/underestimating demand for each model and consider the relationship
between order size and average forecast for each model.
◦ The operational Sport Obermeyer should change from uncertainty to responsive to
production as well as decreasing lead time on all phases of production:
▪ produce products with less vary in demand during the initial phase of production:
 products for boys, girls and preschoolers, and other products that targeted for clients
who are less fashion-oriented / conservative that tend to buy basic styles and colors
▪ propose retailers a discount for early order
▪ use second-production unit to assist the production during the time after Las-Vegas show
to increase the production capacity temporarily when the demand is exactly measured
(so called - responsive production)
▪ in the short-term advantage, Obermeyer management should optimizing the use of
production facilities in China and in Hong-Kong