REEBOK NFL REPLICA JERSEYS
Reebok NFL Replica Jerseys: A Case for Postponement
Maria Franco-Cortes
Liberty University
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REEBOK NFL REPLICA JERSEYS
Reebok NFL Replica Jerseys: A Case for Postponement
Best Reebok Approach Inventory Planning for NFL Replica Jerseys
Kourentzes et al. (2020) affirm that inaccurate forecasts can be costly for company
operations. In managing inventory, it is critical to quantify the demand unce4tainty, typically
encapsulated in forecasts of the demand over the lead period. In this case, Reebok can approach
inventory planning in a variety of ways. Reebok could use postponement to push the decision to
print the players' number and name on the jersey back as far as possible, given the uncertainty
surrounding player demand. Reebok will have a better notion of demand for the individual
players if the decision is postponed until closer to the regular season. This will keep Reebok from
stocking up on jerseys for players it does not need. The postponement also means that Reebok is
aggregating the jerseys, resulting in a more accurate forecast. Reebok will reap some of the
benefits of risk-pooling because a high demand for one player in a team will be counterbalanced
by lower demand for another. High demand for one player in a team will be offset by lower
demand for another, allowing Reebok to reap some of the risk-pooling benefits.
Reebok's supply chain has two screen printing facilities: one at Contract Manufacturers
and the other at Reebok's distribution center. Because the dressed jerseys of each player vary so
widely, Reebok may decide not to order any dressed jerseys from the CMs. The manufacturing
process should begin with creating a generic product, which will then be differentiated into a
specific end-product. There can be a push strategy in place until then. Furthermore, the pull
strategy, in which the supply chain is driven by demand, would be beneficial in this scenario
because the lead time from Reebok's Screen Printing is one week, which is relatively short
compared to the current scenario, which has a lead time of 4+1=5 weeks due to transportation
time. By deploying a responsive and flexible supply chain, the company will achieve a higher
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REEBOK NFL REPLICA JERSEYS
level of service for its products, characterized by a high level of uncertainty. As a result, the
contract manufacturing and Reebok distribution center are separated by a push-pull boundary.
Lower inventory could be achieved if Reebok looked into having the CMs keep only
blank (or dressed) jerseys on hand, dyed and sewed with the team's colors only when there is a
demand for that team. Reebok will be able to respond to demand fluctuations with even more
flexibility as a result. The level of safety stock is also affected by delaying localization. Since
only generic jerseys are kept as safety stock, customizing teams and numbers as demand is
realized, the focus should be on aggregate demand levels, which has a much smaller standard
deviation than individual demand and requires less safety stock than the current system. Reebok
would benefit from lower production costs in this scenario because it produces more dressed
jerseys at a higher volume. Additionally, due to the standardization of the generic jersey
production process, dollars can be saved through transportation economies of scale. That is, we
could significantly reduce the transportation costs of reordering the dressed jerseys.
Reebok’s Goal and its Service Level
Al-Shboul et at. (2017) argue that supply chain management (SCM) has become a crucial
strategy for firms to enhance their profitability and stay competitive. Research studies have
indicated that a higher level of adoption, implementation, and improvement in SCM will directly
lead to the overall firm’s; performance. Therefore, the goal for Reebok should be to maximize
profits while accounting for production costs, sales revenue, inventory holding costs, and the
salvage value of excess jerseys. This is because, while Reebok may want to reduce inventory, it
must also consider the impact this will have on service quality and profitability. In other words,
the company’s goals should be to minimize the inventory of finished goods and maintain the
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inventory of the blank jersey. This goal will help the company to meet further demands at the end
of the season.
Reebok Decision Between Dresses Jerseys and Blank Jerseys
The meaning of underage is under stocking and overage is over stocking.
Cost of blank jersey = $9.5
Cost of Dressed jersey = $10.9
Cost of decorating a blank jersey in Indianapolis = $2.4
Salvage value = $7
For dressed jersey:
Cost of underage if blank available = $1.00
Cost of underage if blank not available = $24.00 –10.90 = 13.10
Approx. cost of underage = 0.92*$1.00 + (1 - 0.92) *$13.10=$1.96
(0.92 is the critical ratio for blank jersey calculated in the next question)
Cost of overage for a dressed jersey: cost of dressed jersey- salvage value= $10.9-$7 = $3.9
For Blank Jersey:
Overage cost of blank jersey= Inventory holding cost= $1.045
Underage cost of blank jersey= lost of sale cost
= Wholesale Price - Blank Jersey Average Cost - Decorate Cost
= $24-$9.5-$2.4
=$12.1
Therefore, Reebok should order more blank jerseys as it would also account for underage dresses
jerseys. It can also be carried over to the next season.
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REEBOK NFL REPLICA JERSEYS
Optimal Quantity to Order for Each Player
The service measure of the team is the probability of the not stocking out which is the
critical ratio. Assuming that the blank jerseys are the marginal units for buying, the cost of
overage of blank jersey is $9.50+/-8.46=1.04. Cost of the underage of blank jersey of $24.00+/-
11.90=12.10. Probability of not stocking out the blank jersey is the critical ratio which is ((12.1)/
(12.1+1.04)) =0.92. Given that the stock out probability for the team, consider every dresses
jersey for each of the star player. Cost of the underage when the blank is available is one dollar.
Cost of the overage of the dresses jersey is $10.90+/-7.00=3.90. Cost of the underage dresses
jersey when the blank is not available is $24.00+/- 10.90=13.10. The approximate cost of the
underage is 0.92($1.00) +(1-0.92) ($13.10) =$1.96. The critical ratio is 0.33.
There is purchase of fifty-one thousand dresses jerseys. Given the quantitate of dresses
jerseys the demand for the blank jerseys is determined by the unmet demand for the star player
plus demand for other players. The cost of the overage for blank jerseys is $9.50 +/- 8.46=1.04.
The cost of the underage of the blank jersey is 424.00+/- 11.9=12.10. Probability of not stocking
out of blank jerseys is 0.92. Therefore, the results of the newsvendor with risk pooling are as
follows. Dresses jerseys purchased is; dresses jerseys E(sold) is 44,265. Dresses jerseys
E(unsold) is 6,962. Blank jerseys purchased is 70,9320. Blank jerseys E(sold) is 42,712. Blank
jerseys E (unsold) is 28,221. Total purchase of dresses jersey purchased is 122,159. Total
purchase of dresses jerseys E(sold) is 86,976. Total purchase of dresses jerseys E(unsold) is
35,183. Total E (short) is 703.
The optimal quantity of dresses jersey ordered for six players must be equal to the
forecasted demand. In case of the other player there is agreement among Company RR and the
team leader for the minimum order quantity to be one thousand seven hundred and twenty-eight
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REEBOK NFL REPLICA JERSEYS
per player of dresses jersey. Company RR should give order of blank jerseys equal to the demand
forecasted which is twenty-three thousand two hundred and twenty-five. The profit for the
dresses jersey is 843,705.5. Profit for the blank jerseys is 257,421.5. Reducing the lead time can
be done by suing the updated technology in communication.
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REEBOK NFL REPLICA JERSEYS
References
Al-Shboul, M. A. R., Barber, K. D., Garza-Reyes, J. A., Kumar, V., & Abdi, M. R. (2017). The
effect of supply chain management practices on supply chain and manufacturing firms’
performance. Journal of Manufacturing Technology Management, 28(5), 577-
609. https://doi.org/10.1108/JMTM-11-2016-0154
Kourentzes, N., Trapero, J. R., & Barrow, D. K. (2020). Optimizing forecasting models for
inventory planning. International Journal of Production Economics, 225,
107597. https://doi.org/10.1016/j.ijpe.2019.107597
Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2021). Designing and Managing the Supply
Chain 3e with Student CD (4th ed.). McGraw-Hill Education.
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