Saurabh Arora

Jonathan David
Mahash
Vyas
Bibin Bose SPORT OBERMEYER
FORECASTING RECOMMENDATION

Forecast Methodology
 Obermeyer used combination of the “panel consensus” and “Delphi method” of qualitative forecasting for
sales forecasts
 We used a single period inventory model to estimate the financial risk of underestimating and
overestimating demand
 Single point forecast data provided is limiting. More complicated forecasting techniques require actual
data collected over time
 Recommend next sales forecast results are summarize and redistribute to the team. Given results new
questions should be asked of the team in regards to what assumptions to apply in the decision making
process

Forecast Assumptions
 Initial 10,000 unit order is riskier due to lack of demand information. Second 10,000 unit order is
less risky because of better demand information on each style.
 The expected lose from liquidating inventory due to overestimating demand is assumed to be 8% of the
wholesale price
 The cost of lost profit from underestimating demand is assumed to be 24% of the wholesale price
 The second order will allow us to adjust for quantities of each style based on better demand information
 1. HOW MANY UNITS TO ORDER DURING NON-
SPECULATIVE ORDER

 Based on 2* SD , choose the safest order we can place without any risk of Markdown loss
 The optimal order quantity is adjusted to meet expected capacity of 10,000 ( The adjustments are made
to non costly items )
OPERATIONAL CHANGES RECOMMENDED

 Reduce the number of styles handled to lower complexity of planning and risk profiles
 Study fashion in Europe rather than waiting for Las Vegas shows
 Reduce production lead times, as the preparation of raw materials takes a long time. For
example:
 To improve efficiencies, dye basic colors early in the year and fashion colors later in the season
 Dyers could be offered a long-term contract regarding Greige goods
 Develop relationships with big-time suppliers that are able to meet tight times and requested
demand
 Increase distribution channels and service level requirements
 Collect and utilize historic data from previous years to better determine future trends
 Where possible, obtain feedback from retailers prior
to Vegas
 3. HOW SHOULD OBERMEYER MANAGEMENT THINK,
BOTH SHORT-TERM AND LONG-TERM, ABOUT
SOURCING IN HONG KONG VS. CHINA?
Hong Kong Pros Hong Kong Cons China Pros China Cons
Skilled Workforce Higher Labor Costs Lower Labor Costs Less Skilled
Workforce
Flexible Production Limited Future Large Workforce Pool Less Flexible
Workforce Response
Faster Production Slower Production
High Quality Outputs Increased Quality
Risks
Lower Minimum Higher Minimum
- China is low
Orders t sourcing , therefo re all strongly forec asted
Ordersorders
cos are to be ere well in
Better US Trade US Trade Relations
placed h advance
-Relations Risks
Since Hong-Kon g is a costly but a agile system , all sp eculative orders
are placed here as demand unfolds