Assignment Name Roll No.

Section

Sport Obermeyer Case Rahul Singh 1301-391 G

Q. Which are the top five profitable products of Sport Obermeyer Pvt. Ltd.?
Ans: According to the case, Sport Obermeyer offers their product for five different genders: mens, womens, boys, girls and Preschoolers. The case essentially covers the data of the womens parks product range. Hence, the profitability shall be calculated using the partial data provided in the case. Sport Obermeyer competed in the market by offering the best price-value combination. Where, Value denoted style and functionality targeting middle and high end skiwear market. The women parkas were offered in 7 sizes per style, 4 colors per style (in 1992, Figure 2-16). The women parka is offered in 10 styles. Hence, there could be 280 (=4x7x10) non-repeating products range. The minimum number of forecasted amount for any style is 600 (For Stephanie, By Laura, Table 2.20) and Maximum to be 4600 (For Seduced, By Laura, Table 2.20). The Hong Kong product assembly has a minimum constraint per style of 600 units and China has a minimum of 1200 units. Hence, I suggest the assembly of products to be distributed between China and Hong Kong according to the forecasted units. The major optimization of the level of distribution will not be needed as the average forecasted demand is 20,000 units and the seven-month production capacity is 21,000 units. Hence, rather than partially distributing the assembly load, sport Obermeyer will need to utilize both the assembly points efficiently. The cost break of Rococo parka has been shown and we can see that the Sport Obermeyer wholesale price quote is at approximately 24% profit margin. Hence, we shall assume this as standard margin share for all the parka products. Now, assuming the final demands to be within 1-standard deviation of average forecast and calculating the profitability of products for 20,000 units batch. The total profit when the sales are down is $348,054. For Initial 10,000 batch produced for Las Vegas show it shall be $174,027. The total profitability when the market sales at boom is $645,593 for 24,715 units. But the capacity of production is only 21,000 units, so the profitability per unit is 26.12 and hence for 21,000 units shall be $548,551. For initial 10,000 Las Vegas batch, it shall be $261,215. Now through this data resolution, the top five profitable products regardless of sales being on lower side or upper side of the mean forecast are Electra, Seduced, Daphne, Assault and Anita.

Range Style Price Profit Avg. Forecast Standard Deviation Lower Limit 823 719 1110 2185 719 1746 589 3461 2249 1686 15287 Upper Limit 1211 1365 1606 2865 1481 2554 1637 4573 4343 3080 24715

Profit Range Lower Limit 21727 17083 21312 47196 21225 72494 18801 60637 50198 59887 Upper Limit 31970 32432 30835 61884 43719 106042 52253 80119 96936 109402

Gail Isis Entice Assault Teri Electra Stephanie Seduced Anita Daphne Total

110 99 80 90 123 173 133 73 93 148

26.4 23.76 19.2 21.6 29.52 41.52 31.92 17.52 22.32 35.52

1017 1042 1358 2525 1100 2150 1113 4017 3296 2383 20001

194 323 248 340 381 404 524 556 1047 697

Loss over unsold (@8%) When Lower Limit sales 1707 2558 1587 2448 3749 5591 5575 3247 7790 8252 42506

390559 645593