Sport Obermeyer
Sport Obermeyer:
Introduction:
Positioned to absorb the market share of premium cold weather gear, the firm Sport Obermeyer is challenged by the lead time inherent in their product development cycle. Overcoming this challenge is tantamount to winning the market away from low-cost high-volume competitors. The problem is that the Executive Team at Sport Obermeyer is clueless about their impending loss of market share (due to competitors that are faster to market), while continuing to predict with wide variation the potential sales of key products. The analysis of this case will follow two key concepts, first the selection of which product line to commit to will be made by considering the margin per unit after considering the probability of forecast accuracy based on a coefficient of variation that has historically proven to be accurate, resulting in a recommendation for how many units of each style Wally Obermeyer should commit to during the initial phase of production. Second the overall process flow of the product development cycle will be discussed with significant improvements proposed.
Sport Obermeyer
1. Using the sample data given in Exhibit 10 (attached). We have assumed that all ten styles are made in Hong Kong, and that Obermeyer's initial production commitment is 10,000 units. (Price differences among styles will be ignored in the initial analysis.) The sample data describes the forecast from each of the key buying committee members.
2. The standard deviation of the committee forecast for the individual styles is shown, as is a factor 2X the standard. From historical experience Wally reflects that the forecast accuracy is highest in styles where the Buying Committee has the highest level of agreement implying the lowest Standard Deviation which (when doubled) the experience of Wally Obermeyer has shown equates to the actual market demand variation.
3. Controlling for experience/knowledge of...
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