Simulation used for Obermeyer case by Xavier Lehnhoff Excel format

1. Xavier Lehnhoff - Operations Management
1. Using the sample data given in Exhibit 10, make a recommendation for how many units of each style Wally Obermeyer should order during the initial phase of production. Assume that all ten styles in the sample problem are made
in Hong Kong, and that Obermeyer’s initial production commitment must be at least 10,000 units. (Ignore price differences among styles in your initial analysis).
China - FIRST ORDER HK - FIST ORDER
Average Standard Standard Variance Z value in Expected Expected Z value in Expected Expected
Style Price Profit (sold) Loss (not sold) Forecast deviation deviation *2 Units produced coefficient K Z table loss gain Z table loss gain
Gail 110 26.4 -8.8 1017 194 388 605 0.191 1.06 0.47 0.68 -5.98 8.45 -1.07 0.14 -1.23 22.70
Isis 99 23.76 -7.92 1042 323 646 357 0.310 0.24 0.60 -4.73 9.58 -0.68 0.25 -1.96 17.89
Entice 80 19.2 -6.4 1358 248 496 832 0.183 -0.32 0.38 -2.40 12.00 -1.53 0.06 -0.40 17.99
Assault 90 21.6 -7.2 2525 340 680 1804 0.135 -1.95 0.03 -0.18 21.05 -2.83 0.00 -0.02 21.55
Teri 123 29.52 -9.84 1100 381 762 292 0.346 0.13 0.55 -5.43 13.22 -0.66 0.26 -2.52 21.97
Electra 163 39.12 -13.04 2150 404 808 1293 0.188 -1.18 0.12 -1.56 34.43 -1.92 0.03 -0.36 38.04
Stephanie 133 31.92 -10.64 1113 524 1048 1 0.471 0.08 0.53 -5.67 14.90 -0.49 0.31 -3.32 21.95
Seduced 73 17.52 -5.84 4017 556 1112 2837 0.138 -2.53 0.01 -0.03 17.42 -3.07 0.00 -0.01 17.50
Anita 93 22.32 -7.44 3296 1047 2094 1075 0.318 -1.00 0.16 -1.18 18.78 -1.29 0.10 -0.74 20.11
Daphne 148 35.52 -11.84 2383 697 1394 904 0.292 -0.85 0.20 -2.34 28.49 -1.28 0.10 -1.19 31.95
20001 10000
Standard
Average Standard deviation
Style Forecast deviation *2 Units produced multiplier 629
Gail 1017 388 605.42 1.06
Isis 1042 646 356.74
Entice 1358 496 831.85
Assault 2525 680 1803.67
Teri 1100 762 291.69
Electra 2150 808 1292.89
Stephanie 1113 1048 1.31
Seduced 4017 1112 2837.42
Anita 3296 2094 1074.73
Daphne 2383 1394 904.28
10000
2. What operational change would you recommend to Wally to improve performance?
Use similar raw materials for products (i.e. fabrics, colors)
Have cheap raw materials in inventory
Start producing most predictable products in advance and leave capacity in peak months for unpredictable products
Seek providers that are closer to the factories
3. How should Obermeyer management think (both short-term and long-term) about sourcing in Hong Kong versus China?
Hong Kong China
More demand certainty (leftover expensive) Cheaper to produce
Smaller volumes Larger volumes required
Staff is more crosstrained Staff is less crosstrained
Staff is more efficient (10 people in each parka line) Staff is more inefficient (40 people in each parka line)
Each employee produces twice as much output Quality concerns
Quotas