Running head: CASE STUDY ONE 1
CASE STUDY ONE 1
Table of Contents
Question One…………………………………………………………………………………....3
Chart………………………………………………………………………………….....4
Question Two……………………………………………………………………………………5
Chart……………………………………………………………………………………..6
Question Three………………………………………………………………………………......7
Chart……………………………………………………………………………………..8
Question Four…………………………………………………………………………………….9
Question Five…………………………………………………………………………………….10
References………………………………………………………………………………………..11
1. Using the sample data given in table 2 - 20 make a recommendation for how many units of each style Wally should make during the initial phase of production. Assume that all ten of the styles in the sample problem are made in Hong Kong and that Wally's initial production commitment must be at least 10,000 units. Ignore price differences among styles in your initial analysis.
The pivotal point that stands out in that question is the fact that the price differences among styles should be ignored. The wholesale selling price for all will be 112.5 dollars (Simchi-Levi, Kaminsky, & Simchi-Levi, 2008). The expected profit on each parka sold was approximately 24 percent which would be 27 dollars, and the expected loss on each parka left unsold was approximately eight percent which would be nine dollars (Simchi-Levi et al., 2008). The production process with any organization holds the key to the competitiveness in the market (Johnson, 2013). If an organization can establish the facets of production in order to create a more successful business model the organization can have more success in the competitive market (Johnson, 2013). The chart below illustrates the initial production commitment. From this information it can be determined that the initial demand is half of the total production, as each number is greater than the Hong Kong's minimum production quantity of 600 units (Simchi-Levi et al., 2008). The total quantity of ordering, as displayed on the chart, is 13,180 which is more than Wally's initial production commitment of 10,000 units. Based on the chart Wally's total quantity for initial production commitment is 13,180.
1. Initial Commitment
CU=27, C0=9
Critical ratio a=CU/(CU+C0)= 0,75
Style
Wholesale Selling Price
Average Forecast
2 * Standard Deviation
Q
Q/2
Gail
112.50
1017
388
1279
639
Isis
112.50
1042
646
1478
739
Entice
112.50
1358
496
1693
846
Assault
112.50
2525
680
2984
1492
Teri
112.50
1100
762
1614
807
Electra
112.50
2150
807
2694
1347
Stephanie
112.50
1113
1048
1820
910
Seduced
112.50
4017
1113
4768
2384
Anita
112.50
3296
2094
4708
2354
Daphne
112.50
2383
1394
3323
1662
Total
13180
2. Can you come up with a measure of risk associated with your ordering policy? This measure should be quantifiable.
One of the most powerful tools used to address variability in the supply chain is the concept of risk pooling (Simchi-Levi et al., 2008). Risk pooling suggest that demand variability is reduced if one aggregates demand across locations (Simchi-Levi...
