Objective/Scope
The purpose of this article is to determine how many units of each style Sport Obermeyer should produce during its initial phase of production (November through March) and during its second phase of production (March through October). Factors that need to be considered in this decision are the risk associated with each style, from where each product will be sourced (Hong Kong or China), and the numerical and opportunity costs associated with the sourcing decision. Operational changes are also recommended in order to improve performance in the short and long-term.
Recommendations
Through a risk analysis it is recommended that:
The Assault, Seduced, Entice, and Electra lines are produced in China for both the first and second production phase.
The Gail, Daphne, Isis, Anita, Teri, and Stephanie lines are produced in Hong Kong for both the first and second production phase.
The following quantities be ordered of each style or he first order: Assault (2,020), Seduced (3,213), Entice (1,200), Electra (1,720), Gail (813), Daphne (600), Isis (600), Anita (600), Teri (600), and Stephanie (600).
The following quantities be ordered of each style or he first order: Assault (505), Seduced (804), Entice (158), Electra (430), Gail (204), Daphne (1783), Isis (442), Anita (2,637), Teri (500), and Stephanie (513). *See Assumptions.
It is also recommended that short term and long term operational changes are implemented in order to make production more fluid and productive. These changes include:
The maximum production should be increased (Short-Term).
Workers of the China plant should be trained to make products faster and of higher quality in order to shorten the lead time of products (Long-Term).
Analysis
Risk Assessment
In order to determine what items should be produced where, a risk assessment was conducted for all lines per the average forecast for each line. The Coefficient of...