Submitted by :GROUP 15 Soham Ranjan PGP/15/252 Mudaliar Ravin Mohan PGP/15/292 S Hariprasad PGP/15/314 Saurabh Pillai PGP/15/318

Key issues
Ski garments and equipment fashion product
Short life cycle and high cyclical variance in demand

Very long supply chain cycle 2 years from supplier to customer

Plans good at the time of formulation become meaningless by the end of cycle

High uncertainty in demand Both seasonality and random variation

Random variation cant be predicted unlike seasonality, trends, and cycles

Poor forecasting No quantitative techniques used Great many SKUs Increase cost and affect profitability
Make planning and forecasting difficult

Long lead times Foster uncertainty, create phase lag and increase

risk Sole market High seasonality, No alternate complimentary channel Under produce hit products (cash cows)
Risk lost sales, lost customer, and permanently damaged image

Over produce undesired products

Have to sell at 8% loss

7/1/2012

1) All Production in Hong Kong

Ordered quantities Average Forecast 2*Standard Deviation Minimum order quantity per style for Hong Kong is 600 Total order quantity should be at least 10,000 units

All Production in Hong Kong

Style Gail Isis Entice Assault Teri Electra Stephanie Seduced Anita Daphne Total Average Forecast 1017 1042 1358 2525 1100 2150 1113 4017 3296 2383 Standard Deviation 194 323 248 340 381 404 524 556 1047 697 2*Standard Deviation 388 646 496 680 762 808 1048 1112 2094 1394 Calculated Order 629 396 862 1845 338 1342 65 2905 1202 989 Actual Order (HK) 629 600 862 1845 600 1342 600 2905 1202 989 11574

2) Measure of Risk
Coefficient of Variation (CV) can be used as a measure

of risk
Higher CV means a more risky proposition

CV = Standard Deviation/Average Forecast The products with lesser Coefficient of Variation are at

a lower risk than the products with higher Coefficient of Variation

Measure of Risk
Style Gail Isis Entice Assault Teri Electra Stephanie Seduced Anita Daphne Average Forecast 1017 1042 1358 2525 1100 2150 1113 4017 3296 2383 Standard Deviation 194 323 248 340 381 404 524 556 1047 697 Coefficient of Variation 0.191 0.310 0.183 0.135 0.346 0.188 0.471 0.138 0.318 0.292

Stephanie and Teri are high risk products Assault and Seduced are low risk products

3) All Production in China

Ordered quantities Average Forecast 2*Standard Deviation Minimum order quantity per style for China is 1200 Total order quantity should be at least 10,000 units

All Production in China

Average Style Forecast Gail 1017 Isis 1042 Entice 1358 Assault 2525 Teri 1100 Electra 2150 Stephanie 1113 Seduced 4017 Anita 3296 Daphne 2383 Total Standard Deviation 194 323 248 340 381 404 524 556 1047 697 2*Standard Calculated Actual Actual (Ch) Deviation Order Order (Ch) Calculated 388 629 1200 571 646 396 1200 804 496 862 1200 338 680 1845 1845 0 762 338 1200 862 808 1342 1342 0 1048 65 1200 1135 1112 2905 2905 0 2094 1202 1202 0 1394 989 1200 211 14494 Actual (Ch) Actual (HK) 571 600 338 0 600 0 600 0 0 211

4) Supply chain changes

Sourcing changes
Lengthy cycle mismatches resource and production peaks
Minimum order requirements high Long lead times for key items Change order cycle No prototyping reduced effective lead time
Split demand into two

Order basic colors early and fashion specific colors later

Forecasting changes
Use previous years demand base
Factor in weather forecasts, cyclical (macroeconomic) and seasonal factors Use EOQ/ hybrid model, use statistical smoothing techniques Base forecast by product line per quarter e.g. Mens parka, womens parka

etc
7/1/2012 9

Supply chain changes

Manufacturing changes
Produce during low volume months Use assemble to order technique
Manufacture standard sub assemblies and stock. This will eliminate finished good

inventory and decrease order lead time

This is also consistent with decreasing the number of SKUs

Distribution changes
Ship by A B C rule
A Ski resorts and ski shops least risk, high margins ship early
B Sports departmental stores higher risk ship later C Discount and retail outlets highest risk ship out of demand products

Expand to alternate complimentary channels

Target Australia, New Zealand, and South America Southern hemisphere, will

have peak season when demand dries up in US Thus they can avoid selling at loss

7/1/2012

10

5) Hong Kong Vs. China

Long-term sourcing to China for cost benefits but not

sourcing entirely to China due to quota restrictions in US and the low labour productivity Short-term increased demand for specific SKU should be sourced to Hong Kong for timely delivery and lower minimum order quantity Sourcing policy: Continue sourcing in both China and Hong Kong with more focus on China for cost benefits, sourcing more demand SKUs to Hong Kong for timely delivery.