Business Studies

Please re-write the following answers to these questions below and add two additional references. All references should have DOI

Given the uncertainty associated with player demand, how should Reebok approach inventory planning for NFL replica jerseys?
When it comes to Reebok, it was evident that outcomes within the company were highly unpredictable and displayed just how rapid change can transpire. Thus, demand forecasting is so pivotal because it allows a business to set correct inventory levels, price their products correctly, and understand how to expand or contract their future operations. Poor forecasting can lead to
lost sales, depleted inventory, unhappy customers, and millions in lost revenue (McClendon, 2020). Given the uncertainty of popularity when it comes to teams and players, the most appropriate approach for Reebok to entertain is to postpone the finalization of jerseys for as long as possible to ensure that the jerseys are as current as possible prior to shipping them from the
manufacturer and then to Reebok.

What should Reebok’s goal be? Should Reebok minimize inventory at the end of season? Or maximize profits? Can Reebok achieve both? What service level should Reebok provide to its customers?

Concerning Reebok’s goal, the focus should be on minimizing the company’s remaining inventory and maximizing profits by the end of the season. To complete this, Reebok must forecast a precise market demand for a given season. Due to the nature of the sport, the market demand is continuously modifying, especially when it comes to unpredictable factors such as key
players and winning teams. By minimizing inventory and maximizing profits, this is certainly achievable by improving the forecast and closing the gap on the standard deviations. Reebok must obtain an extremely high service level, 98%, as they are constantly needing to modernize their inventory based on demand.

What is the cost of underage and overage for a dressed jersey?

Since Reebok has to sell its left-over dressed jersey at a discount, the overage cost is the average cost per dressed jersey minus discount price, and the underage cost for dressed jersey is calculated by average cost of blank jersey plus decorative cost minus dressed jersey average cost. Reebok will need to understand the different costs between dressed jerseys and blank
jerseys, such as the higher costs of decorating blank jerseys in Indianapolis than at the CM. If, Reebok is certain that its forecast is accurate, it would be cost beneficial to order dressed jerseys; however, no forecast is completely accurate, so by ordering all dressed jerseys would become a
risk for Reebok. Blank jerseys allow Reebok to be more flexible with the demands of consumers;
however, costs are higher, and if Reebok increases the price, it might lose consumers to its
competitors. Therefore, the best course of action for Reebok is to order a mix of both with a
larger quantity of blank jerseys, since the overage cost is less for blank jerseys than dressed
jerseys.

Using the forecast for the New England Patriots – what is the optimal quantity to order for each player? For blank jerseys? What profit do you expect for Reebok? How much and what type of inventory is expected to be left over at the end of the season? What service level?

Reebok is a well established company who has offered countless sports memorabilia for decades. The company fully understands the challenges that arise when forecasting popular teams and players. Additional research communicates that inaccurate forecasts can be costly for one’s operations, especially when it comes to stock-outs, lost sales, over-stocking, or not meeting
service level targets (Kourentzes et al., 2019). When it comes to preparation and demand, Reebok has implemented a system to forecast based on predicting factors such as past sales, the performance of the teams and players, market intelligence, orders that were placed in advance, and informed guesses. As time continues throughout a season, it will become evident if these forecasts were accurate and what the market demand truly consists of. Forecasting in correlation with known market demand is what Reebok ultimately utilizes for product planning and determining how much of a product is needed at the manufacturer.

References
Kourentzes, N., Trapero, J. R., & Barrow, D. K. (2019, December 19). Optimising forecastingmodels for inventory planning. International Journal of Production Economics.https://www.sciencedirect.com/science/article/abs/pii/S0925527319304323.

McClendon, A. (2020, June 4). Importance of Demand Forecasting. Aimpoint Digital.https://aimpointdigital.com/importance-of-demand-forecasting/#:~:text=Demand%20forecasting%20is%20so%20pivotal,and%20millions%20in%20lost%20revenue.

Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2021). Designing and Managing the Supply
Chain: Concepts, Strategies and Case Studies (4th ed.). New York, NY: Richard D.
Irwin, Inc. ISBN: 9780073403366.

ANSWER

Discussion rewrite

When it came to Reebok, it was clear that the company’s outcomes were incredibly unpredictable, demonstrating how quickly things can change. As a result, demand forecasting is critical because it allows a company to set proper inventory levels, price its products effectively, and choose how to expand or reduce its operations in the future. Poor forecasting can result in a loss of sales, depleted inventories, dissatisfied consumers, and millions of dollars in revenue (McClendon, 2020). Given the ambiguity of popularity when it comes to teams and players, Reebok’s best bet is to delay the finalization of jerseys for as long as possible in order to ensure that the jerseys are as current as feasible before shipping them from the manufacturer to Reebok.

When it comes to Reebok’s objective, the focus should be on reducing the company’s remaining inventory and increasing profits by the end of the season. To do so, Reebok must estimate exact market demand for a specific season. Because of the nature of the sport, market demand is constantly changing, particularly when it comes to unpredictably important aspects like significant players and winning teams. This is undoubtedly doable by improving the forecast and reducing the gap on the standard deviations while minimizing inventory and optimizing profitability. Due to the ongoing requirement to modernize their inventory based on demand, Reebok must achieve an extraordinarily high service level of 98 percent.

Because Reebok must sell its unsold dressed jerseys at a discount, the overage cost is calculated as the average cost per dressed jersey minus the discount price, and the underage cost is calculated as the average cost of the blank jersey plus the decorative cost minus the average cost of the dressed jersey. Reebok will need to understand the expenses of dressed and blank jerseys, such as the higher cost of embellishing blank jerseys in Indianapolis than at the CM. If Reebok is confident in its estimate, ordering dressed jerseys would be cost effective; however, no forecast is 100% accurate, thus ordering all dressed jerseys would be a waste of money.

Reebok is at risk. Blank jerseys allow Reebok to be more adaptable to changing market conditions.

Reebok is a well-known brand that has been selling sports memorabilia for decades. The organization is well aware of the difficulties that can occur when predicting popular teams and players. According to additional study, erroneous estimates can be costly to a company’s operations, particularly in terms of stock-outs, missed sales, over-stocking, and failure to fulfill service level standards (Kourentzes et.al, 2019). Reebok has created a forecasting method based on anticipating aspects such as prior sales, team and player performance, market data, pre-ordered orders, and educated predictions when it comes to preparedness and demand. As the season progresses, it will become clear whether these projections were accurate and what the true market demand is. Forecasting based on historical data

References

Biçer, I., Hagspiel, V., & De Treville, S. (2018). Valuing supply-chain responsiveness under demand jumps. Journal of Operations Management, 61, 46-67. https://doi.org/10.1016/j.jom.2018.06.002

Czinkota, M. R., Kotabe, M., Vrontis, D., & Shams, S. M. (2021). Distribution and Supply Chain Management. In Marketing Management (pp. 499-552). Springer, Cham. https://link.springer.com/chapter/10.1007/978-3-030-66916-4_11

Kourentzes, N., Trapero, J. R., & Barrow, D. K. (2019, December 19). Optimising forecasting models for inventory planning. International Journal of Production Economics. https://www.sciencedirect.com/science/article/abs/pii/S0925527319304323.

McClendon, A. (2020, June 4). Importance of Demand Forecasting. Aimpoint Digital. https://aimpointdigital.com/importance-of-demand-forecasting/#:~:text=Demand%20forecasting%20is%20so%20pivotal,and%20millions%20in%20lost%20revenue.

Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2021). Designing and Managing the Supply
Chain: Concepts, Strategies and Case Studies (4th ed.). New York, NY: Richard D.
Irwin, Inc. ISBN: 9780073403366. https://www.tandfonline.com/doi/full/10.1080/23311975.2018.1503219