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Wally Manufactuirng Suggestions

Satisfactory Essays

Question
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 of the 10 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.
Answer
During the speculative production phase, it is better to under-produce all styles since Obermeyer still has a second production opportunity. The recommended numbers of units to produce for each style in Hong Kong are listed in the table below.
Style Average forecast, µ 2 x Standard deviation, 2σ First period production quantity, µ-2σ Hong Kong
Gail 1017 388 629 629
Isis 1042 646 396 600
Entice 1358 496 862 862
Assault 2525 680 1845 1845
Teri 1100 762 338 600
Electra 2150 807 1343 1343
Stephanie 1113 1048 65 600
Seduced 4017 1113 2904 2904
Anita 3296 2094 1202 1202
Daphne 2383 1394 989 989
Total 20001 NA 10573 11574
2
Question
What operational changes would you recommend to Wally to improve performance?
Answer
Key problems:
1. Short life cycle products with short selling season
2. Long manufacturing lead time from planning to production
3. Highly uncertain demand
Operational changes:
1. Cut down on number of styles and forecast customer demand for each style
2. Develop promotion schemes to encourage retailers to order more
3. Improve the China workers’ level of

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