Sport Obermeyer

1

Sport Obermeyers Time Line and Speculative versus Reactive Production"NOW" Initial Forecast Las Vegas Revised Forecast 27 Months

9 months Feb Oct 1992 1992 Design of 1993-94 Line.

5 months Nov Mar 1992 1993

5 months April Aug 1993 1993

Sept 1993

Oct 1993

Nov 1993

"Speculative" Productionof 1993-94 Line

"Reactive" Productionof 1993-94 Line

8 months Dec Jan 1993 1994 Selling of

Feb 1994

Mar 1994

Apr 1994

1993-94 Line (peak selling in Dec & Jan)

In Feb 1993, start design of 1994-95 line.

In Feb 1994, start design of 1995-96 line.

Speculative Production

Reactive Production

2

Speculative Production: Overstock versus Stockout?Assume that Sport Obermeyer:is in the Speculative Production phase, forecasts that demand (D) for the Andy parka has a Normal Probability Distribution with a mean of 1000 and a standard deviation of 250, and

has decided that the Andy parkas Speculative Production should be Q=750.Pr{Stockout}=Pr{D>Q} =0.841

Pr{Overstock}=Pr{D