Running head: SUPPLY CHAIN MANAGEMENT
Supply Chain Management Case Study
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Institution:
2
SUPPLY CHAIN MANAGEMENT
Supply Chain Management Case Study
Question One
Forecast for 10 Styles
Style
Pricing
Average
Forecast
SD
2 x SD
Gail
110
1017
194
388
Isis
99
1042
323
646
Entice
80
1358
248
496
Assault
90
2525
340
680
Teri
123
1100
381
762
Electra
173
2150
404
807
Stephanie
133
1113
524
1048
Seduced
73
4017
556
1113
Anita
93
3296
1047
2094
Daphne
148
2383
697
1394
totals
20000
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SUPPLY CHAIN MANAGEMENT
SF = max
(μ-2m, m- μ,0)
Σ
Order Quantity =Max (600, μ-600- [min. sf x σ])
China Analysis
Style
Price
μ
SD
2xSD
u-
2m/SD
m-
u/sd
SF
u-
1200
Total
Seduced
73
4017
556
1113
1.45
-2.53
1.45
2817
2728
2728
Gail
110
1017
194
388
-3.56
.47
.47
-183
-214
1200
Anita
93
3296
1047
2094
.43
-1.00
.43
2096
1928
1928
Isis
99
1042
323
646
-2.1
.24
.24
-158
-210
1200
Assault
90
2525
340
680
.18
-1.95
.18
1325
1271
1271
Teri
123
1100
381
762
-1.71
.13
.13
-100
-161
1200
Stephanie
133
1113
524
1048
-1.23
.08
.08
-87
-171
1200
Electra
173
2150
404
807
-.31
-1.18
0
950
885
1200
Daphne
148
2383
697
1394
-.01
-.85
0
1183
1071
1200
Entice
80
1358
248
496
-2.10
-.32
0
158
118
1200
Totals
14327
Hong Kong Analysis
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SUPPLY CHAIN MANAGEMENT
Style
Price
μ
SD
2xSD
u-
2m/SD
m-
u/sd
SF
u-600
Total
Seduced
73
4017
556
1113
2.53
-3.07
2.53
3417
3060.8
3060
Assault
90
2525
340
680
1.95
-2.83
1.95
1925
1707.2
1707
Electra
173
2150
404
807
1.18
-1.92
1.18
1550
1291.6
1291
Anita
93
3296
1047
2094
1.00
-1.29
1.00
2696
2025.9
2025
Daphne
148
2383
697
1394
.85
-1.28
.85
1783
1336.9
1337
Entice
80
1358
248
496
.32
-1.53
.32
758
599.39
600
Gail
110
1017
194
388
-.47
-1.07
0
417
292.78
600
Isis
99
1042
323
646
-.24
-.68
0
442
235.19
600
Teri
123
1100
381
762
-.13
-.66
0
500
256.29
600
Stephanie
133
1113
524
1048
-.08
-.49
0
513
177.72
600
Totals
12420
Combined Analysis
Style
Laur
a
Car
olyn
Gre
g
Wen
dy
To
m
W
all
y
AF
SD
2xS
D
Prod
uce=
avg-
2sd
Hong
Kong
China
Gail
900
1000
900
1300
800
12
00
101
7
194
388
629
629
1200
Isis
800
700
1000
1600
950
12
104
323
646
395
600
1200
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SUPPLY CHAIN MANAGEMENT
00
2
Entice
1200
1600
1500
1550
950
13
50
135
8
248
496
863
863
1200
Assaul
t
2500
1900
2700
2450
280
0
28
00
252
5
340
680
1845
1845
1845
Teri
800
900
1000
1100
950
18
50
110
0
381
762
338
600
1200
Electr
a
2500
1900
1900
2800
180
0
20
00
215
0
404
807
1343
1343
1343
Steph
anie
600
900
1000
1100
950
21
25
111
3
524
1048
65
600
1200
Seduc
ed
4600
4300
3900
4000
430
0
30
00
401
7
556
1113
2904
2904
2904
Anita
4400
3300
3500
1500
420
0
28
75
329
6
104
7
2094
1202
1202
1202
Daphn
e
1700
3500
2600
2600
230
0
16
00
238
3
697
1394
990
990
1200
totals
2000
0
2000
0
2000
0
2000
0
200
00
20
00
0
200
00
1057
2
1157
3
14493
Production Differences
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SUPPLY CHAIN MANAGEMENT
Style
Pric
e
Produc
e
=avg-
2sd
HK
China
Hong
Kong
Exces
s
Order
China
Exces
s
Order
HK
Extra
Cost
China
Extra
Cost
HK
Op
time
in
WKs
Chin
a
Op
Tm
in
WKs
Gail
110
629
629
1200
0
571
0
62810
2.76
2.5
Isis
99
395
600
1200
205
805
20295
79695
2.63
2.5
Entice
80
863
863
1200
0
337
0
26960
3.78
2.5
Assault
90
1845
1845
1845
0
0
0
0
8.09
3.84
Teri
123
338
600
1200
262
862
32226
106026
2.63
2.5
Electra
173
1343
1343
1343
0
0
0
00
5.89
2.8
Stephani
e
133
65
600
1200
535
1135
71155
150955
2.63
2.5
Seduced
73
2904
2904
2904
0
0
0
0
12.7
4
6.05
Anita
93
1202
1202
1202
0
0
0
0
5.27
2.5
Daphne
148
990
990
1200
0
210
0
31080
4.34
2.5
10527
1157
3
1449
3
1002
3920
123,67
6
457,52
6
50.7
6
30.19
Question Two
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SUPPLY CHAIN MANAGEMENT
Style
Average Forecast
Standard Deviation
Coefficient of
Variation
Gail
1,017
194
0.191
Isis
1,042
323
0.310
Entice
1,358
248
0.183
Assault
2,525
340
0.135
Teri
1,100
381
0.346
Electra
2,150
404
0.188
Stephanie
1,113
524
0.471
Seduced
4,017
559
0.138
Anita
3,296
1,047
0.318
Daphne
2,383
697
0.292
Question 4
The statistics show that the company takes a long time from the purchase of raw
materials to the actual selling of the items. It translates to inconsistent demands for the company
that affects the performance to a large extent (Barrow & Kourentzes, 2016). Wally may
experience reduced demands in the future that may lead to loss of the business as it becomes
unsustainable. He may consider reducing the number of products or styles sold in the business. It
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SUPPLY CHAIN MANAGEMENT
ensures that the company can focus on few products and manage the inventory appropriately
(Wild, 2017). Skills may also fall short that makes specific product lines substandard to the
market targeted. Transaction costs remain high and Wally may need to implement strategies that
help reduce the costs (Bozarth & Handfield, 2016). It may entail increasing the limit on the
number of products per single transaction to increase the economies of scale and reduce the costs
associated with a single transaction. Inventory management may also help to streamline the
inefficiency of the company operations. Large amounts of stock increase the stock holding costs.
It may also entail improving on the lead time to ensure that inventory movement is efficient.
Stock outs may also cause an increase in losses associated with stock outs that may result to loss
of revenue and diminish customer loyalty in to the business.
Question 5
Outsourcing entails having the production occurring from either China or Hong Kong.
Outsourcing may have certain advantages that the company can use to streamline the current
operational performance. However, it may also require certain adjustments to the normal
operation of the business that may prove challenging to realize (Costa, 2016). Outsourcing may
occur from Hong Kong or China which the company needs to evaluate to use the optimal
method. Outsourcing from Hong Kong has the advantage of higher product quality and faster
production due to smaller production quantities. However, the high cost of labour may drive cost
of production higher. China has the advantage of having lower wage rates that may reduce
production costs (Hugos, 2018). However, it has a longer working hours and the quality of
products are lower than those produced in Hong Kong. The minimum requirement per order is
higher in Hong Kong which may present a challenge in inventory management. Therefore, based
on the position of the company and the challenges it faces, the best strategy for the short-term
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SUPPLY CHAIN MANAGEMENT
entails outsourcing from Hong Kong. It helps to solve the problem of inventory management and
reduce the lead time by a large extent.
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SUPPLY CHAIN MANAGEMENT
References
Barrow, D. K., & Kourentzes, N. (2016). Distributions of forecasting errors of forecast
combinations: implications for inventory management. International Journal of
Production Economics, 177, 24-33.
Bozarth, C. C., & Handfield, R. B. (2016). Introduction to operations and supply chain
management. Pearson.
Costa, K. (2016). God at Work: Live Each Day with Purpose. Thomas Nelson.
Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.
Wild, T. (2017). Best practice in inventory management. Routledge.
